U.S. Stock Valuation Indicator Reaches Record High, Signaling Potential Market Risks

According to PANews, recent data reveals that the "Buffett Indicator," a key measure of U.S. stock valuations, has surged to an unprecedented 205%, marking a historic high. This figure surpasses levels seen during the dot-com bubble and the 2008 financial crisis, indicating that market valuations are significantly overestimated. Currently, the total market capitalization of U.S. stocks exceeds twice the country's GDP. Despite the indicator suggesting a potential market bubble, the market reaction has been relatively subdued. As trading commenced in the second half of 2025, the Dow Jones Industrial Average rose by 426 points (1%), the S&P 500 remained largely unchanged, and the Nasdaq Composite Index fell by 0.6%. Investors have shifted funds from technology stocks like Microsoft and Nvidia to healthcare stocks such as Amgen, Merck, and UnitedHealth, which saw gains of nearly 3%, with Johnson & Johnson also rising by almost 2%. The elevated level of the Buffett Indicator suggests that the market may face adjustment risks, prompting investors and analysts to closely monitor future trends. The coming months will be crucial in determining whether the market can sustain its current high valuations or if a correction is imminent.