Hype is building on Wall Street. Apple is wowing investors with new gadgets. Alibaba, the biggest IPO ever, is in the pipeline. And stocks are still hovering near record highs. But is all the hype good for the market?
Stocks tend to do better when investors have stuff to worry about. Things like war. Terrorism. Oil shocks. Rising interest rates. Well, there’s not a lot of people worrying about the market now. In the past three weeks, the three Wall Street strategists that were the most bearish on stocks all turned bullish. And despite the hype, Apple shares fell 37 cents Tuesday to $97.99, even though it launched a smartwatch, a pair of new iPhones and a new mobile payment system. The Dow fell 98 points.
Then there’s Alibaba. The Chinese Internet giant is getting ready to raise more than $20 billion when it sells stock to the public for the first time, perhaps as early as next week. Alibaba will flood the market with 320 million shares. That’s a lot of stock for sale, and raises the question of whether there’s enough investor demand to soak up the supply. Bankers don’t normally do IPOs unless optimism is high on Wall Street. But there’s a catch: When everyone thinks the stock market is the place to be, and that stocks can only go up, that’s when the market gets into trouble. It’s hard to say if the Apple and Alibaba story lines — and the hype — are a sign of a stock market top. But it’s sure worth contemplating.