Investing.com -- Valuations across U.S. equities have reset significantly, with both the S&P 500 and Nasdaq now trading at the lower end of their recent ranges, according to Scott Rubner, Head of Equity and Equity Derivatives Strategy at Citadel Securities.

The S&P 500 forward price-to-earnings ratio sits at approximately 19.7 times, below its 5-year average of 20.1 times, and in the 6th percentile of its 1-year range, marking the lowest level since April 2025's Liberation Day. Historically, when the S&P 500 forward P/E falls below 20 times, forward returns have been favorable, the strategist notes. Since 2020, there have been 13 instances where the index broke below this threshold, resulting in an average 30-day return of 3.5%, a median return of 6.4%, and positive returns 75% of the time.

Meanwhile, the Nasdaq 100 forward P/E has declined to approximately 21.7 times, now below its 10-year average of 22.8 times, and near the lowest levels seen in the past year. The ratio sits in the 2nd percentile on a 1-year basis and the 13th percentile over 5 years.

The valuation spread between the Nasdaq 100 and S&P 500 has compressed materially. The Nasdaq-S&P 500 forward P/E spread is now approximately 2.0 times, its narrowest level in more than seven years since December 2018, and within the bottom quintile of its 10-year range. The spread closed below 2 times on Friday.

Over the past 20 years, there have been 30 instances when this spread fell below 2 times. In the 30 sessions following such occurrences, the Nasdaq 100 delivered average and median returns of 2.7%, rallying 76% of the time, while also consistently outperforming the S&P 500 over the same period, Rubner said.

Volatility remains elevated but has started to compress slightly. QQQ 1-month at-the-money implied volatility sits in the 85th percentile of its one-year range, down from the 93rd percentile on Friday.

In several large-cap technology names, 25-delta call implied volatility has fallen to close to its lowest levels in the last year. NVIDIA's 1-month 25-delta call implied volatility is in the 3rd percentile of its 1-year range. NVDA represents approximately 8% of SPY, where 1-month 25-delta call implied volatility sits in the 90th percentile.

Similar patterns appear across other technology stocks. Tesla's 1-month 25-delta implied volatility sits in the 6th percentile, Palantir in the 10th percentile, Google in the 20th percentile, and Broadcom in the 25th percentile of their respective 1-year ranges.