American Bank strategists believe that the high valuation of the S&P 500 index is a "new normal" rather than a bubble.

From a historical perspective, the valuation of the US stock market is shockingly high. But according to a team of strategists at Bank of America, led by Savita Subramanian, upon closer examination, such high valuations may not be without merit. In a report sent to clients on Wednesday, the team wrote that based on 19 of the 20 internal indicators they track, the valuation of the S&P 500 index is statistically "expensive", with 4 indicators hitting historical highs. However, the report pointed out that some inherent characteristics of the current S&P 500 index components - including lower financial leverage, smaller profit volatility, higher efficiency, and more stable profit margins than in previous decades - all contribute to supporting the currently high valuations. This analysis contrasts sharply with another view on Wall Street, which compares the current high valuations to the bursting of the "dot-com bubble" at the turn of the century, and warns of the risk of a bubble repeating.