Dow crosses 22,000 as investors ignore valuations

Markets were mixed on Wednesday.

In the US, the Dow Jones Industrial Average rose 0.2 percent to close above 22,000 for the first time but the S&P 500 edged up less than 0.1 percent and the Nasdaq Composite was flat.

Elsewhere, the STOXX Europe 600 fell 0.4 percent while in Asia, the Nikkei 225 rose 0.5 percent but the Shanghai Composite fell 0.2 percent.

“Valuations do look stretched relative to historical norms, but investors are looking a little farther out, and valuations don’t look that bad in that context,” said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management.

Investors in technology stocks, in particular, are ignoring valuations, according to Arjun Kharpal at MarketWatch.

He quoted an investor as saying last week: “forget about valuations, just own the damn thing”.

In contrast, a CNBC report noted that the tech sector has seen “a divergence between momentum and price action that signals the market may be getting reading to consolidate”.

Jason Hunter, head of fixed income and equities technical analysis at JPMorgan, suggested that the market is “setting up for a pullback in the next few weeks”.

Meanwhile, Brett Arends at MarketWatch suggested that investors could consider global stocks.

But be careful about Japanese stocks. Some analysts think that the months-long lull in Japanese equities could take an abrupt turn in the second half of the year.