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 drifting around a record on Friday as they head for the close of a second straight winning week. The S&P 500 was virtually unchanged in early trading, a day after setting an all-time high.