As S&P 500 hits another record high, investors start to look elsewhere

Markets were mostly higher on Thursday.

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

US investor sentiment was boosted by positive economic data released on Thursday.

Retail sales rose 0.3 percent last month, claims for unemployment benefits fell last week for the fifth consecutive week and the Philadelphia Fed's gauge of business activity rose to 17 in January from 2.4 last month.

The National Association of Home Builders' confidence index fell one point to 75 in January from the previous month but remains near its highest reading since 1999.

A MarketWatch report said that “optimism is lingering for now”, and quoted Ciovacco Capital Management founder and chief executive Chris Ciovacco as saying that “the stock market made a cyclical low in 2018 within the context of a secular trend” and that “the secular trend could push stocks higher for another five to 15 years”.

Some analysts, though, note the high valuation for the US stock market.

According to Bank of America, the price-earnings to growth ratio sits at 1.8, its highest level since the firm started tracking it in 1986, while the price-earnings ratio is at 18.4 times, the highest since 2002.

“The S&P 500 is running on fumes,” said Bank of America equity and quant strategist Savita Subramanian.

This is leading some analysts to suggest looking elsewhere for investments.

“We would be looking more at international and emerging markets,” said Gary Hager, president and CEO of Integrated Wealth Management.