The CAPE ratio for the S&P 500 is a widely followed measure of U.S. stock market valuation. It compares the index’s current price to the average inflation-adjusted earnings of its constituent companies over the past 10 years. By smoothing out short-term fluctuations, the CAPE ratio offers a more stable view of long-term market trends. A high CAPE ratio indicates that the market may be overvalued, suggesting lower future returns, while a low CAPE ratio signals potential undervaluation and higher long-term returns. Historically, the S&P 500’s CAPE has been used to predict market performance over decades.