Stocks in the United States rose last week, their fifth consecutive weekly gain, with benchmark indices hitting new record highs.
The Standard & Poor’s 500 Index rose 1.2 percent to 2,063.50. The Dow Jones Industrial Average rose 1.0 percent to 17,810.06.
Elsewhere in the world, the STOXX Europe 600 Index rose 2.9 percent but the MSCI All-Country Asia Pacific Index fell 1.3 percent.
Markets were boosted by actions by central banks last week.
The People's Bank of China announced on Friday that it was cutting one-year benchmark lending rates by 40 basis points to 5.6 percent and one-year benchmark deposit rates by 25 basis points to 2.75 percent.
Also on Friday, European Central Bank President Mario Draghi told an audience of bankers in Frankfurt that “we will do what we must to raise inflation and inflation expectations as fast as possible”, raising investors' expectations of further monetary stimulus.
Stocks are likely to continue to rally in the next few weeks as we approach the end of the year, traditionally a period in which markets do well.
However, further upside could be limited as stock valuations are already very high.
In a commentary on 13 November, the Federal Reserve Bank of San Francisco noted that the cyclically adjusted price-earnings ratio for the S&P 500 was 25.7, exceeding the long-run historical average of 16.6 and implying mildly negative real growth in stock prices over the next 10 years.
Furthermore, the ratio of New York Stock Exchange margin debt to GDP has risen to near all-time highs, and that similar sharp rises in the ratio in 1999 and 2006–07 were followed by major downturns in stock prices.
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