Saturday 10 April 2021

S&P 500 hits another record high, “irrational exuberance is building”

Markets were mostly higher on Friday.

The S&P 500 rose 0.8 percent to a record high, the STOXX Europe 600 rose 0.1 percent and the Nikkei 225 rose 0.2 percent.

US producer prices rose 1.0 percent in March and 4.2 percent from the previous year, the largest annual gain in nine years.

“Inflation in the pipeline keeps heating up,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Larry Adam, chief investment officer at Raymond James, suggested that “rising interest rates, healthy levels of inflation, and an eventual Fed rate hike are not necessarily market negatives”, noting that stocks often perform well under such conditions as long as economic growth remains robust.

Still, Chris Beauchamp, chief market analyst at IG, said that “with equity inflows continuing to hit new multi-year highs the sense of ‘irrational exuberance’ is building once again”.

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