The S&P 500 increased about 150 percent between the end of 1994 and December 1998. Stock prices are a function of both corporate earnings and the P/E ratio. At the end of 1994, the P/E based on current earnings was 15. At the end of 1998, it was 32.6. Over the period 1994–1998, corporate earnings rose about 25 percent, and the P/E ratio more than doubled, thereby accounting for much of the sharp rise in the S&P 500 during that period.