Wall Street analysts are becoming concerned that the record-setting stock market is beginning to crack.
The benchmark S&P 500 has rallied 11% this year, closing at a record high in 23 of 23 trading sessions, according to Dow Jones Market Data. The index has climbed 86% off its March 2020 low.
“The asset bubble keeps on getting bigger and bigger,” wrote David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research. “Please understand that this is the second most expensive S&P 500 index of all time. And we have not been in the middle 60% of this bull market in many months.”
As evidence for just how expensive this market is, Rosenberg pointed to cyclically adjusted price-to-earnings (CAPE) data showing that earnings per share are at December 2016 levels when the S&P 500 was trading at 2,250 – 46% below Monday’s close. Dividends per share, another commonly used metric, are at levels seen in October 2019 when the S&P 500 was trading at 3,000.
Despite the stretched valuations, retail investors are pouring money into the stock market. During the first three months of the year they bought a record $300 billion of equity exchange-traded funds, according to a J.P. Morgan global markets strategy team led by Nikolaos Panigirtzoglou.
Keep reading at Fox Business for more on this developing story.