U.S. Stock Market is witnessing record highs for S&P 500 and Nasdaq Composite. Some investors have raised apprehensions that rapid uptick in stock prices is similar to that of 1990s dot com bubble.
Bleakley Financial Group chief investment officer Peter Boockvar pointed to another troubling signal in the market: the S&P 500 recently reached a record high even as 5 per cent of its constituent stocks simultaneously dropped to 52-week lows.
According to Boockvar, this unusual divergence has appeared only three other times in modern market history — in July 1929 before the Wall Street crash, January 1973 ahead of the stagflation-era bear market, and December 1999 just before the dot-com bubble burst — raising concerns that underlying market weakness may be masked by headline index strength, Yahoo Finance reported.
Wall Street Investors Have a Good News
Evercore ISI strategist Julian Emanuel has stated that there is no doubt that stock valuations are high and a sense of 1999 vibe is palpable. However, Emanuel noted stocks are yet not trading at "Y2K extremes", as per a report on Yahoo Finance.
1999 "dot com darlings" stocks used to trade at 152 times than price-to-earnings. However, AI shares of 2026 have been trading 39 times earnings, Yahoo Finance reported.
Top brokerages expect the benchmark S&P 500 index to extend its rally in 2026, even as Middle East tensions disrupt global energy flows and drive inflation higher. Strategists at major investment banks expect momentum in artificial intelligence and strong corporate earnings to offset the conflict's short-term economic impact.
However, they warned that persistently higher oil prices could increase recession risks. HSBC and RBC Capital Markets raised their year-end targets for the S&P 500 this month, flagging resilient earnings growth and continued strength in AI-linked sectors.
S&P 500 added 0.2 per cent to its record set on Friday. The Dow Jones rose 0.2 per cent, and the Nasdaq composite gained 0.1 per cent to its own record.
On Monday, S&P 500 rose 13.91 points, or 0.2 per cent, to 7,412.84, Dow Jones Industrial Average rose 95.31 points, or 0.2 per cent, to 49,704.47, Nasdaq composite rose 27.05 points, or 0.1 per cent, to 26,274.13, and Russell 2000 index of smaller companies rose 9.43 points, or 0.3 per cent to 2,870.64.
