It was another huge day for the stock market.
First the scoreboard:
Dow: 15,354, +121.1 pts, +0.8%
S&P 500: 1,667, +17.0 pts, +1.0%
NASDAQ: 3,498, +33.7 pts, +0.9%
And now the top stories:
- Stocks surged to another all-time high today. At 1,666, the S&P 500 is a full 1,000 point above its March 2009 low of 666. Some are worried things are getting too hot. But most agree that markets are nowhere near the irrational exuberance days of 2000 and 2007.
- "Anyone can find similarities in the stock market action of different years," writes Reformed Broker Josh Brown. "It's not complicated - stocks can really only do some combination of three things, up, down or sideways. But this type of comparative analysis is, as always, a function of what details you choose to leave out. I can compare my house to the Taj Mahal if I choose to leave out quantitative factors like square footage or qualitative factors like its location or historical significance."
- Brown and other market experts will first note that earnings are much higher today than they were during previous peaks, meaning that valuations as measured by price-to-earnings (PE) are relatively reasonable.
- JP Morgan's Tom Lee cranked up his year-end target for the S&P 500 to 1,715 based on a 14.7 PE on his 2014 EPS forecast of $117. "This has been a better bull market than we expected, particularly in 2013," he said. "But this is conforming to history—the average gain in the fifth year of a bull market is 19% (implies 1,719)."
- Unfortunately, most stock market investors are not fully benefiting from the rally. As Morgan Stanley's Gerard Minack noted in his final note to clients, investors 1) try to beat the markets only to underperform and 2) buy high and sell low, which makes their returns that much worse.
- "In short, amateurs may be able to beat the investment professionals," said Minack noting that anyone can cheaply invest in index funds and outperform most pros. "[B]ut most do far worse. This keeps professional investors in business (and that keeps people like me employed, which is nice). But it means that returns to investors typically lag benchmark returns by a long margin."
- If there were a catalyst for today's rally, then it was the May consumer confidence report published by the University of Michigan. The index surged to 83.7 from 76.4 last month. This is the highest reading since July 2007.
- Don't Miss: 10 Countries Anxiously Watching Their Massive Gold Hoards Fall In Value >
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