New highs not uncommon: S&P 500 achieves record in 53% of years

Is there any implicit reason to be worried just because U.S. stock benchmarks are near all-time highs? Not really, history suggests. This chart shows that since 1946, the Standard & Poor's 500 Index spent some part of 37 calendar years at levels that exceeded any past peak, or 53% of the total. Twelve months after closing at one, the index was about three times more likely to be higher than lower, the data show. It's been another year of records for U.S. shares, with the S&P 500 closing at highs 10 different times and the Nasdaq Composite Index surpassing its dot-com peak set in 2000. While it may be tempting to view new highs as a sign markets are stretched, there's no basis for assuming the milestone means anything ominous for the future. "The market tends to take the stairway up and the elevator down,'' said Charles Smith, chief investment officer at Fort Pitt Capital Group Inc. in Pittsburgh, which oversees about $1.8 billion. "But you don't know when the elevator is going to go down.'' The benchmark equities gauge rose 0.1% to end Monday at 2,128.28, after briefly rising above its record closing level of 2,130.82 during the session. The S&P 500 has produced 108 all-time highs since the start of 2013, driving the index to more than 30% above its previous peak in 2007. At its latest, on May 21, the measure traded at 18.8 times earnings. While that's 14% higher than its average multiple in the past decade, it implies an earnings yield of 5.3%, more than double the payout from 10-year Treasury bonds. Buying stocks when the S&P 500 hit a record has proved profitable as the momentum builds up. The index's 12-month return following an all-time high has been positive 73% of the time since 1946, data compiled by Bloomberg show.