With stock prices continually reaching record highs in recent weeks, some market participants are growing concerned that valuations are stretched.
The Standard & Poor's 500 index rose 9.53 points, or 0.5 percent, to 1,977.10. The index is down 0.4 percent from its most recent all-time high of 1,985.44 set July 3.
The index had a trailing price-earnings ratio of 19.13 Friday, up from 18.43 a year ago, according to Birinyi Associates.
Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000
Many experts are warning investors to be cautious,
The New York Times reports.
"Equities don't look great, but they look better than bonds," Kristina Hooper, investment strategist at Allianz Global Investors, tells the paper.
"I can't stress enough how unique and extraordinary this environment is. All bets are off. We would advise investors to be far more discerning and selective and more concerned about valuations."
Wallace Weitz, manager of Weitz Value fund, agrees.
"I don't find anything that I would pound the table about. We care about absolute value. Relative value doesn't matter much if everything is expensive. There's not much that I would say anybody needs to be in a rush" to buy.
"You have to be realistic; very few things are cheap on an absolute basis," Russ Koesterich, chief investment strategist at BlackRock, notes. "Investors have been conditioned by every scare they read about in the paper to buy the dip because the conditions go away," he said. "One day they won't."
The market's short-term direction depends on upcoming earnings reports, many experts say. "The second-quarter earnings season in the U.S. is likely to be the next major driver of global markets," Evan Lucas, a markets strategist at IG Ltd., writes in a commentary obtained by
Bloomberg.
"With all the major U.S. banks reporting this week, the market will get the best view of the self-sustaining U.S. economy that the Fed now sees."
Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000
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