JPMorgan estimates the S&P 500’s fair value at around 5400, implying the index is about 6% overvalued.

However, the bank views this premium as modest and likely to be offset by earnings growth and strong U.S. liquidity trends.

Using a 4.8% discount rate—just below the 10-year average—JPMorgan says valuations are slightly elevated but not alarming. The bank cautions against relying on headline P/E ratios, urging investors to consider where the market sits in the earnings cycle.

Looking ahead, the April 2 tariff announcement remains a key risk, though JPMorgan notes recent investor flows suggest expectations for a benign outcome.

Despite valuation concerns, the bank believes accelerating money supply and corporate earnings could continue to support equities through 2025.