The S&P 500 and ETFs pegged to the U.S. blue-chip index finally set new intraday highs on Wednesday even though most individual investors still don’t seem to have much faith in the rally.
SPDR S&P 500 (NYSEArca: SPY) traded as high as $158.84 a share on Wednesday, eclipsing its October 2007 record high of $157.52 a share.
The S&P 500 joins the Dow Jones Industrial Average in retracing at least 100% of the losses suffered during the financial crisis.
However, many investors doubt the rally as the Federal Reserve continues to inject liquidity and the employment market remains soft.
“Markets are extended at this point, but the rally has been led by defensive stocks, and any bad news, such as last Friday’s jobs data, will give investors incentives to take profits,” said Gary Thayer, chief macro strategist at Wells Fargo Advisors, in a Financial Times report. [The Other ‘Great Rotation’ to Defensive Sector ETFs]
“We believe overall fundamentals are good and that the Fed will not slow the quantitative easing program prematurely. Once the economy is truly improving and the stimulus is gradually withdrawn, markets will still be supported by positive growth,” he added.
However, Tomi Kilgore at WSJ.com’s MarketBeat blog reports that even as the S&P 500 hits a new all-time high, fewer stocks are participating in the index’s rally.