Dow continues breaking records

By — Bloomberg News,

The Dow Jones industrial average has made 53 records since January. In the week just ended, the measure crossed the 23,000 level for the first time — the sixth 1,000-point milestone reached in the past 12 months.

In and of itself, that’s not ominous. In fact, buying stocks when the S&P 500 hit a record has proved profitable. Since 1946, the S&P 500 has spent some part of 38 calendar years at levels that exceeded any past peak, or 54 percent of the total. Twelve months after closing at one, the index’s return has been positive 72 percent of the time.

What about valuation? At Friday’s close, the S&P 500 traded at 19.5 times forecast earnings. It represents an earnings yield of 5.1 percent, more than double the payout from 10-year Treasury bonds.

Investors, shunning stocks during most of the 8½-year bull market, have started to warm up to the rally. They added $8.4 billion to U.S. equity funds during the week through Wednesday, data from EPFR Global show.

The U.S. treasury will sell $42 billion of three-month bills and $36 billion of six-month bills Monday. They yielded 1.11 percent and 1.27 percent, respectively, in when-issued trading. It will also sell four-week bills and $26 billion of two-year notes on Tuesday; $15 billion of two-year floating-rate notes and $34 billion of five-year notes on Wednesday; and $28 billion of seven-year notes on Thursday.

— Bloomberg News

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