(Repeats column first released late on Aug. 22 with no changes)
By Ryan Vlastelica
NEW YORK Aug 22 U.S. stocks have been on a roll
of late, with the S&P 500 hitting the latest in a series of
records on Thursday, and investors expect the index's momentum
to soon carry it to - if not far past - the 2,000 milestone.
The S&P is about 10 points, or 0.4 percent, from that
landmark, which analysts expected would be reached toward the
end of the year, according to the most recent Reuters poll.
Reaching it ahead of schedule is the latest
affirmation that stocks are widely preferred to bonds, even with
further upside seen as limited as the Federal Reserve remains on
track to end its bond-buying stimulus program in October.
The level has more psychological than fundamental
significance, and it could prompt market participants to
consider whether their holdings have become stretched.
The "2,000 (level) has no fundamental significance outside
of suggesting that stocks are fully valued and getting more so
all the time," said David Joy, chief market strategist at
Ameriprise Financial in Boston. "We should see some weakness as
Fed policy winds down, but I'd still rather own stocks than
bonds, as in the long run they'll continue to expand."
The S&P is up 7.8 percent this year, outpacing overseas
indexes and shrugging off headwinds such as a weather-depressed
first quarter and political unrest abroad. Both defensive and
cyclical stocks have led at times, but traders expect technology
and healthcare names, the market's current leaders, to drive it
"Now is not the time to seek out value over growth," said
Jeff Mortimer, director of investment strategy for BNY Mellon
Wealth Management in Boston. "Price momentum tends to have
stickiness in this kind of market."
Every S&P sector is positive year-to-date, with tech
and healthcare both up about 13 percent,
eclipsing the 11 percent rise of utilities, the previous leader.
Despite record levels and the lack of any sustained pullback
since 2012, investors are finding reasons to buy, with U.S.
stock funds getting $9.9 billion in inflows last week, according
to Thomson Reuters' Lipper service.
Only two of the 27 industry groups that Wells Fargo monitors
are down from 12 months ago, a breadth that leads to
year-over-year gains 90 percent of the time, the firm wrote,
with the S&P rising an average of 12.7 percent.
Optimism about near-term market direction hit a nine-month
high in the latest AAII Sentiment Survey, with 46.1 percent of
respondents expecting gains over the next six month.
"There's a good underlying tone in the market and we still
have plenty of prospects for more gains," said Michael Mullaney,
chief investment officer at Fiduciary Trust Co in Boston.
He added that he would not be concerned about valuation
until the S&P's forward price-to-earnings ratio was 17 and its
trailing P/E was 20. Those metrics currently stand at 15.7 and
(Reporting by Ryan Vlastelica.; Editing by Andre Grenon)