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 The S&P is about 10 points, or 0.4 percent, from that landmark,
which analysts expected would be reached toward the end of the year,
according to the most recent Reuters poll. Reaching it ahead of
schedule is the latest affirmation that stocks are widely preferred
to bonds, even with further upside seen as limited as the Federal
Reserve remains on track to end its bond-buying stimulus program in
October..
The level has more psychological than fundamental significance, and
it could prompt market participants to consider whether their
holdings have become stretched.
The "2,000 (level) has no fundamental significance outside of
suggesting that stocks are fully valued and getting more so all the
time," said David Joy, chief market strategist at Ameriprise
Financial in Boston. "We should see some weakness as Fed policy
winds down, but I'd still rather own stocks than bonds, as in the
long run they'll continue to expand."
The S&P is up 7.8 percent this year, outpacing overseas indexes and
shrugging off headwinds such as a weather-depressed first quarter
and political unrest abroad. Both defensive and cyclical stocks have
led at times, but traders expect technology and healthcare names,
the market's current leaders, to drive it over 2,000.
"Now is not the time to seek out value over growth," said Jeff
Mortimer, director of investment strategy for BNY Mellon Wealth
Management in Boston. "Price momentum tends to have stickiness in
this kind of market."
Every S&P sector is positive year-to-date, with tech and healthcare
both up about 13 percent, eclipsing the 11 percent rise of
utilities, the previous leader.
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Despite record levels and the lack of any sustained pullback since
2012, investors are finding reasons to buy, with U.S. stock funds
getting $9.9 billion in inflows last week, according to Thomson
Reuters' Lipper service.
Only two of the 27 industry groups that Wells Fargo monitors are
down from 12 months ago, a breadth that leads to year-over-year
gains 90 percent of the time, the firm wrote, with the S&P rising an
average of 12.7 percent.
Optimism about near-term market direction hit a nine-month high in
the latest AAII Sentiment Survey, with 46.1 percent of respondents
expecting gains over the next six month.
"There's a good underlying tone in the market and we still have
plenty of prospects for more gains," said Michael Mullaney, chief
investment officer at Fiduciary Trust Co in Boston.
He added that he would not be concerned about valuation until the
S&P's forward price-to-earnings ratio was 17 and its trailing P/E
was 20. Those metrics currently stand at 15.7 and 17.4,
respectively.
(Reporting by Ryan Vlastelica.; Editing by Andre Grenon)
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