The vibes are good on Wall Street as 2026 begins. There’s just one issue: Stocks are really expensive. Bank of America strategist Savita Subramanian noted Wednesday that the S & P 500 is registering a high valuation in 18 of 20 metrics she tracks. These include trailing price-to-earnings ratio, enterprise value to EBITDA and forward consensus PE. The benchmark has “never been more expensive” when looking at market cap to GDP, price to book value, price to operating cash flow and enterprise value to sales,” she added. “No way to sugar coat it: the S & P 500 is expensive,” Subramanian wrote, adding that “risks to the index abound in 2026.” Subramanian sees the S & P 500 ending the year at 7,100, the lowest among those included in the 2026 CNBC Market Strategist survey . That implies a gain of just 3.8% from Wednesday’s close (U.S. markets were closed Thursday due to New Year’s Day). .SPX YTD mountain SPX year to date Among the risks she pointed out was a slowing in the labor market, as the implementation of artificial intelligence leads to job cuts . Still, there are parts of the market worth owning, Subramanian said, especially health care and real estate. “Health Care and RE are inexpensive relative to historical market multiples. More importantly, the sectors are cheap for good reasons: positive trends in revisions compared to the broader market, plus a three month run of outperformance. These factors in concert indicate good value,” Subramanian said. Health care and real estate lagged the broader market last year. The former rose around 12% in 2025, while the latter fell marginally.
