Though stocks have surged this year, many analysts think the broader market still remains attractive.
The S&P 500 is currently trading at about 16.5 times earnings from last year, just slightly above the historical average of 16, according to Bank of America Merrill Lynch data. In the bubble days of 2000, the index was trading at nearly 30 times trailing earnings.
The benchmark index is also fairly valued when using earnings estimates for next year. According to Bank of America Merrill Lynch's expectations, the S&P 500 is trading at less than 15 times 2014 earnings estimates. And analysts at the banks are predicting profit growth of 6% next year, following an increase of 5% in 2013.
Bank of America Merrill Lynch equity and quantitative strategist Savita Subramaniam adds that Corporate America's balance sheets are much healthier now than they were during the recession. So a small premium might be justified.
Plus, stocks are especially attractive compared to bonds. Michael Sheldon, chief market strategist of RDM Financial Group, said he expects economic and earnings growth to pick up over the next several quarters. In addition, interest rates and inflation remain low. That's usually a better environment for stocks than bonds.
On the economic front, U.S. jobless claims rose last week but were below expectations. Analysts expected a higher figure because the previous reading was distorted due to two states reporting incomplete results. And existing home sales unexpectedly rose in August to an annual rate of almost 5.5 million, according to the National Association of Realtors. That's the highest rate since February 2007.
What's moving: Shares of Take-Two Interactive ( rose after the company said its latest game, Grand Theft Auto V, raked in )$800 million in worldwide retail sales on Tuesday, the day it was released. The increase in Take-Two is yet another home run for Carl Icahn, who is the biggest shareholder of the company. Icahn has had huge success this year with stakes in Netflix ( and )Herbalife ( as well. )
Despite the impressive sales numbers, StockTwits users remained cautious.
Meanwhile, Tesla ( shares rallied to a )record high after analysts at Deutsche Bank raised their price target to $200 per share. While Tesla is a favorite among StockTwits traders, one trader noted the enthusiasm and momentum might be a little too strong.
Groupon ( shares jumped after Stifel Nicolaus analysts upgraded the stock to buy from hold. Shares of fellow social media stock )Facebook ( advanced to an all-time high above $46 per share. At least one trader seemed to favor Groupon over Facebook. )
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