May 1 (Bloomberg) -- “Most investors have missed the rally” in U.S. stocks, so further gains are likely as they spend some of their cash to buy shares, according to Andrew Garthwaite, a global strategist at Credit Suisse Group.
The Standard & Poor’s 500 Index may reach 1,000 before prices peak, he wrote in a report yesterday. His estimate is 15 percent higher than yesterday’s close of 872.81, which resulted from the S&P 500’s biggest monthly gain since March 2000. The index last closed above 1,000 on Nov. 4.
As the CHART OF THE DAY shows, investors have more money stashed away in money-market mutual funds than in equity funds, according to data compiled by the Investment Company Institute. That hadn’t been the case for 16 years, according to the report, which included a chart comparing the funds’ assets since 1991.
Money-fund assets climbed to a record 49 percent of U.S. stocks’ market value in March, according to Garthwaite. At the current reading of 39 percent, individual investors have more than enough money available for buying shares and “will have to get involved,” he wrote.
Garthwaite kept his year-end estimate for the S&P 500 at 920, partly because the emergence of swine flu may curtail any gains in shares. Consumer debt reductions and the potential for deflation are among other hurdles, he wrote. He added that he would recommend cutting U.S. stock holdings if the benchmark index exceeds 950.
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