That said, some analysts believe the stock market is sending off distress signals that ought to worry the bulls.
Thanks to weaker-than-expected data on retail prices, the Atlanta and New YorkFederal Reserve banks recently downgraded their outlook for U.S. economic growth for the first quarter, according to CNBC.com.
On top of that, there’s been a shift in sentiment about the prospects for the Trump administration to deliver tax cuts and a big infrastructure package this year.
Copper and bank shares have turned downward, while safe-haven utility shares have advanced, signs that investors are turning more cautious.
Economic surprises on the upside have also fallen off, according to data compiled by Citigroup.
Investors are also extremely bullish despite signs of economic softness and relatively high stock valuations.
Take a look at this “Irrational Exuberance” indicator pulled together by the Bespoke Investment Group.
It shows a disconnect: Investors are confident that the market will be higher a year from now. Yet they’re not that confident about valuations a year from now.
Finally, there are signs that the breadth and momentum of the current rally may have weakened.
The average 50-day moving average of the S&P 500 is below 50%.
Again, the safe-haven utilities sector leads the pack.
Billionaire investor Paul Tudor Jones recently pointed out that the value of the stock market relative to the size of the economy has mushroomed in recent years.
According to Tudor, years of low interest rates have bloated stock valuations to 2000 levels, right before the Nasdaq tanked by 75 percent over two-plus years.
US stocks have had a pretty good 2017 so far.
But investors need to keep their eyes on the horizon.
There’s some evidence that the second half may be more bumpy for stock investors, in my opinion.
- Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.