US stocks are riding high with all indexes back at record-high levels. The Dow Jones, S&P 500, and Nasdaq Composite have all reached new highs, thanks to a mix of reasons such as the artificial intelligence (AI) revolution and President-elect Donald Trump’s victory.

Strong earnings reports and rising market confidence in President Trump’s policies, including tax cuts and deregulation, are expected to boost economic growth and company profits further.

The S&P 500 has seen a noteworthy upsurge, rising by 3.6 percent year-to-date and 25 percent over the previous year, as the U.S. stock market continues to run hot in January. The expected yearly growth in corporate earnings is 14.8%, which is significantly higher than the trailing 10-year earnings average of 8% from 2014 to 2023.

The S&P 500’s trailing multiple is presently 28.5X, much higher than its historical median of 15.04X, signaling overvaluation. Shiller’s P/E ratio of 38.35X indicates potential low forward returns, akin to the pre-Great Depression and dot-com boom periods.

Jamie Dimon, CEO, JPMorgan Chase, voiced worries about the high prices in the U.S. stock market, pointing to more general dangers including inflation, deficit spending, and geopolitical unpredictability.

Speaking to CNBC at the World Economic Forum in Davos, Switzerland, Dimon said, “Asset prices are kind of inflated, by any measure. They are in the top 10% or 15% of historical valuations.”

Regarding the US market especially, Dimon emphasized the continuous multi-year surge in stocks while pointing out that certain segments of the bond market, such sovereign debt, are also “at all-time highs.”

Dimon cautioned that present asset values need “fairly good outcomes to justify those prices,” highlighting the potential for unpleasant shocks even though pro-growth initiatives could be beneficial.

Even though there is still hope for the Trump administration’s pro-growth initiatives, Dimon’s cautious tone serves as a warning of the risks investors face when market valuations are high. Jamie Dimon, CEO of JPMorgan Chase, is cautioning investors to sell in early 2025, claiming that the U.S. stock market is overpriced.