The U.S. stock market is at an all-time high and investors keep buying into it when nothing is happening, according to a top Wall Street strategist.
Ed Yardeni, president of Yardeni Research described the bull run as a “Seinfeld market,” referring to the popular U.S. television show that was “mostly about nothing.”
“When Seinfeld aired on television, millions of Americans viewed the show that was mostly about nothing. Nothing ever happened, which viewers found very entertaining,” Yardeni said in a note to clients. “During every episode, investors are watching for something to happen. When nothing happens, especially nothing bad, investors are bemused and show their appreciation by throwing more money at the bull.”
The Dow Jones industrial average, S&P 500 and Nasdaq composite all closed at records on Wednesday and remained near those levels in Thursday’s session. Some of the sectors leading the charge higher in the stock market include tech and health care, which have risen 25.5 percent and 20.1 percent in 2017, respectively.
During a phone interview with CNBC, Yardeni said this market has been driven by two factors: Earnings and valuation.
“Earnings continue to be at an all-time high,” Yardeni said. “They have also recovered nicely from the earnings recession that started out in 2015.”
Corporate U.S. earnings grew by more than 10 percent in each of the first two quarters of the year.
“Valuation is high but some investors have come to think this economic expansion could continue. As long as people think the expansion can last, the higher valuation will be,” he said.
Wednesday was not the first time Yardeni called this bull market the Seinfeld market. On May 4, Yardeni also said the market “is running on nothing that is happening.”