No End in Sight for Stocks' Longest Streak in 20 Years
By Daniel Kruger and Akane Otani
Stocks continue their steady march higher, notching milestones not seen in more than 20 years, yet many investors see few obstacles to the seemingly endless run.
The S&P 500 closed at its sixth consecutive record Thursday, its longest streak of highs since 1997. A gauge of expected swings in the index fell to an all-time low. Investors don't see many worries ahead: The economy keeps growing at a slow but steady pace, corporate earnings remain healthy and investors are betting a tax overhaul will further boost profits.
That isn't what many analysts and investors expected coming into this year, when they thought bond yields would rise as the economy heated up, and stocks would stall as valuations remained stretched. Instead, bond yields are lower than where they ended last year -- the benchmark 10-year U.S. Treasury note stood at 2.352% Thursday, down from 2.446% at the end of 2016 -- and inflation remains stubbornly short of the Federal Reserve's 2% target.
Stocks have kept climbing. The Dow Jones Industrial Average and Nasdaq Composite closed at fresh highs Thursday.
"It's kind of like the 1996 moment where Alan Greenspan himself called stocks irrationally exuberant" and the rally continued for three more years, said Jason Pride, director of investment strategy at Glenmede, which has about $37 billion in assets under management. Stocks are expensive now, but they "are not at extremes," he said.
The S&P 500's current record streak is the longest since the eight highs ending June 17, 1997, during the dot-com boom.
The markets have been so calm that some analysts and investors have expressed concerns that money managers are growing complacent. The CBOE Volatility Index, known as Wall Street's "fear gauge," fell 4.6% Thursday to 9.19, surpassing its record closing low of 9.31 set in December 1993.
Stock-market gains have been broad, spanning regions and sectors. Japan's Nikkei Stock Average closed at its highest level since August 2015 on Thursday. The Stoxx Europe 600 rose for nine straight trading days through Tuesday, its longest winning streak in more than two years.