19.06.2025

Current Market Situation of the S&P 500: Risks and Opportunities for Investors

Current Development of the S&P 500

  • The S&P 500 is currently just below its all-time high at around 6,148 to 6,150 points and has recently recovered from this level.
  • As of mid-June 2025, the index stood at around 5,983 points, which is close to the previous high.
  • Despite the proximity to the record high, warnings are issued about a possible correction or crash, as some indicators suggest overvaluations.

Valuation and Risk Indicators

  • Especially in the information technology sector of the S&P 500, the price-to-earnings ratio (P/E) is significantly above the historical average at around 33.38, which is considered overvalued. This may signal increased risks.
  • Long-term trends, while showing a positive distance from the moving averages (SMA50 and SMA200), which is generally bullish, indicate that the high valuation could favor a correction.

Impact of Monetary Policy

  • The US Federal Reserve remains in focus: Although it is currently still combating inflation, interest rate cuts are expected in the near future. These monetary policy decisions can have strong effects on the stock market.
  • A restrictive monetary policy may apply short-term pressure on the market; however, later interest rate cuts could provide support again.

What Investors Should Know Now

  • Caution with High Valuations: Especially technology stocks are highly valued – this increases the risk of a pullback.
  • Market Proximity to All-Time Highs: An index close to record levels may be more susceptible to profit-taking.
  • Monetary Policy Uncertainties: Fed’s interest rate policy remains a central factor for volatility.

Strategic Recommendations

Investors should prepare their portfolios for possible turbulence:

  • Increase diversification to reduce risk
  • Consider hedging strategies such as put options
  • Maintain liquidity reserves for buying opportunities after possible price declines

In summary, at least one bank warns of a possible crash of the S&P 500 due to high valuations and monetary policy uncertainties. Thus, investors should act cautiously and adjust their financial strategies to be protected in turbulent times.