U.S. stocks have been on fire this year. The S&P 500 is up more than 15 percent in 2017, boosted by strong corporate earnings, expectations of a U.S. tax code overhaul and improving global economic conditions. Monetary policy — which has been a boon for stocks since the financial crisis — also remains loose compared with historical standards.
But analysts at the investment bank said the S&P 500 was now “entering expensive territory.”
On Monday, Alain Bokobza, head of global asset allocation at SocGen, said U.S. stocks were comparable to a boiling frog that doesn’t realize the trouble surrounding it.
“We expect stretched valuations and rising bond yields to limit equity index performances in 2018 and the prospect of a U.S. economic slowdown in 2020 to further cramp returns in 2019,” he said.