SOURCE:
USA TODAYURL:
http://www.usatoday.com/story/money/markets/2016/07/11/stocks-hit-highs-whats-different-time/86953726/by: Matt Krantz
The Standard & Poor's 500 punched in a new high Monday, showing the bull market is alive and well. But investors can only wonder just how much the bull has left and what's different from the last time it was at a record.
The S&P 500 finished Monday what it couldn't quite pull off last week by closing at 2137.16, just above the May 21, 2015, closing high of 2130.82. The accomplishment underscores the market's ability to shrug off the initial panic of the United Kingdom's decision to pull out of the European Union, notch a nearly 5% gain this year and put to rest fears the bull market died last year.
"The difference this time is sentiment," says Brad McMillan, chief investment officer at Commonwealth Financial Network. "The market pulled back on a lot of bad news" the past year and a half, he says, "but we found out the world didn't come to an end."
Data highlight how investors' nerves have calmed again. The CBOE Volatility S&P 500 Index, a measure of investors' fear, is back to the relatively low levels where it was a year ago. The so-called fear gauge has dropped 67% from the levels it hit last August as investors worried about everything from the Federal Reserve raising rates to China's economic slowdown.
However, there are a lot of things that have changed since the last time the market was setting new highs. A few of the measures investors are looking at when comparing now and then include the changes in:
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Expectations for the direction of interest rates. When the market hit highs last year, the Federal Reserve was top of mind. Fear the Fed would hike short-term interest rates in 2015 and follow up with a number of additional increases in 2016 put investors on alert, says Jamie Cox, managing partner at Harris Finance Group. But "that's not the case this time," he says. Rates on the 10-year Treasury have fallen 40% this year to record lows, rather than soaring as many investors predicted. The Vanguard Total Bond Market exchange-traded fund (BND), instead of suffering, is up 5% this year.
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