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Illustration: Aïda Amer/Axios

The S&P 500 closed at a new all-time high on Tuesday and has rallied by around 52% since hitting its low point on March 23 — the best run the index has ever had in such a short time.

The state of play: While the market has continued to rise for the past five months, most investors have been incredulous about the sustainability of gains.

What's happening: Data from the Investment Company Institute show equity funds continue to see outflows and bond funds continue to see inflows.

  • For the week ended Aug. 5, the last week for which data are available, investors pulled $20.3 billion out of equities and put $27.3 billion into bonds.
  • Equity funds have seen net outflows in every month this year and they have increased in recent months as stock prices have gone up — outflows in March, when the market crashed to its nadir were $25.6 billion, but rose to $45.1 billion in June and totaled $76.7 billion in July based on ICI weekly estimates.

Money market funds, which are ostensibly savings accounts, also have been stubbornly high in 2020 despite the booming market.

  • Investors have parked at least $4.5 trillion of cash in money markets since the week ending April 15.
  • That's about 50% more — $1.5 trillion — than MMFs held in April 2019 and an increase of more than $600 billion from the highest level of holdings following the global financial crisis.

What they're saying: "The S&P 500 has been impressive and has created a lot of wealth, but I am not sure that reflects the overall health of the economy," Patrick Leary, chief market strategist at Incapital, told Reuters.

  • "The rally has more to do with asset inflation, which is fueled by all the liquidity and all the continued support in the economy as well as the weakening dollar."

Yes, but: Some asset managers are starting to get bullish in public and in notes to their clients, encouraging stock buying.

Watch this space: Divergence continues to be a major theme in the stock market. Big U.S. tech stocks have led the way, with the Nasdaq up 22% year to date, setting new record highs for months.

  • U.S. equities continue to outperform the rest of the world with MSCI's index of global stocks excluding the U.S. down 4.7% year to date, compared to the S&P's 4.9% gain.

Go deeper

Wall Street bets it all on a vaccine

Illustration: Eniola Odetunde/Axios

It's the time of year when Wall Street shops are rolling out predictions for where they see the stock market headed in the coming year. There's one common theme: Widespread distribution of a vaccine is the reason to be bullish.

Why it matters: Analysts say vaccines will help the economy heal, corporate profits rebound and stock market continue its upward trajectory.

Ben Geman, author of Generate
Nov 25, 2020 - Economy & Business

Tesla's wild rise and European plan

Tesla's market capitalization blew past $500 billion for the first time Tuesday.

Why it matters: It's just a number, but kind of a wild one. Consider, via CNN: "Tesla is now worth more than the combined market value of most of the world's major automakers: Toyota, Volkswagen, GM, Ford, Fiat Chrysler and its merger partner PSA Group."

Dan Primack, author of Pro Rata
Nov 25, 2020 - Economy & Business

Stripe in talks to raise funding at valuation of at least $70 billion

Illustration: Aïda Amer/Axios

Stripe, a San Francisco-based digital payments infrastructure company, is in talks to raise new private funding at a valuation of at least $70 billion, and perhaps as high as $100 billion, per Bloomberg.

Why it matters: This would make Stripe the world's second-most valuable venture-backed company, or maybe the most valuable if ByteDance divests its majority stake in TikTok by this Friday's CFIUS deadline. It's also another indication that Stripe's founding Collison brothers are reticent to bring the company public.

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