Warren Buffett's historic $127 billion warning to Wall Street happens to align with another stock market alarm. Specifically, the S&P 500 currently trades at a historically expensive valuation. The index achieved a cyclically adjusted price-to-earnings ratio (CAPE) of 37.9 in December 2024, which is a substantial premium to 20-year average of 27.

U.S. stocks are hanging near their all-time high on Friday as they head for the close of a second straight winning week.The S&P 500 was edging down by 0.1% in morning trading, a day after setting a record.