What’s On Tap After Market Records and Labor Market Improvement?

Last week was historic, and there are two obvious reasons why.

First, on Tuesday, the Dow Jones Industrial Average rolled confidently through its previous record high of 14,164.53. The buzz was — and still is — tangible. Like most things, reactions to the new record fall between two ends of a spectrum, and every day that the market extends its high, the ends of the spectrum get farther apart. Are equities a bright spot in a sluggish economy? or are they a house of cards waiting to collapse?

The consensus among pundits seems to be that reality is a double-edged sword. Equities are currently still the favored asset class, but experts are pretty much comparing the markets to a minefield right now. Data from EPFR Global showed that stock funds gained $7.14 billion during the week ended March 6. This compares against cash gains of just $1.2 billion for the previous week. Gauges of investor sentiment, such as the TD Ameritrade Investor Movement Index, are high relative to historic averages. In short, everyone wants to be involved in the record-setting market, but there’s a lingering feeling that something must be about to go wrong.

“If I had to pick a category, I’d still be looking at equities,” Frank Fantozzi, chief executive of Planned Financial Services, told Reuters. However, “we’re telling clients to take a more defensive approach to the market right now,” he added.