The Dow (^DJI) and S&P 500 (^GSPC) closed at new record highs Tuesday, leaving both major market indexes up 15% year-to-date, outperforming most other asset classes. Investors clearly are favoring stocks over other asset classes.
Commodity prices are little changed (oil) or lower (gold). And 10-year Treasury yields, at 1.95%, are near where they started the year, though up sharply from the year’s 1.63% lows.
Within the stock market, investors are favoring high dividend-paying stocks. They have higher yields than Treasuries and are seen as safer investments than other stocks because of the cushion those dividends provide. But Seth Masters, chief investment officer of Bernstein Global Wealth Management, says those so-called safe dividend-paying stocks are more risky than ever.
“What [investors ] have been doing in the last few quarters is moving into parts of the stock market that are perceived to be safe, more defensive stocks like utilities, and in the process they have pushed prices up to unprecedented levels,” says Masters. (more)
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