Thursday, 27 July 2017

US stocks at record highs amid investor optimism seen as warning sign

Markets mostly rose on Wednesday.

The Dow Jones Industrial Average, STOXX Europe 600 and Nikkei 225 all rose 0.5 percent. The Dow, S&P 500 and Nasdaq Composite all closed at record highs.

US stocks shrugged off the Federal Reserve's announcement after its monetary policy meeting that it will start to reduce its holdings of government and mortgage debt “relatively soon”.

Kim Forrest, senior portfolio manager at Fort Pitt Capital, said that the market has been driven by corporate earnings, and that “so far we’ve had enough upside surprises” and “there is still room to grow” for the market.

Indeed, optimism is pervasive among investors. CNBC reported that bullishness in the most recent Investors Intelligence survey hit 60.2 percent, the highest level since late February.

Bears comprised just 16.5 percent of respondents.

“The latest sentiment is not encouraging for the rest of the year as markets rarely fulfill expectations,” John Gray, editor at II, wrote. “This is a new major warning calling for defensive measures to protect profits, renewing the same signal from earlier this year.”

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