By Lewis Krauskopf
NEW YORK (Reuters) - Another global shock. Another collective yawn by U.S. stock investors.
Equity investors appeared to largely brush off the latest apparent threat to the world's security: A global cyber attack, which began spreading on Friday that by Monday had infected computers in more than 100 countries. Adding to global jitters, North Korea said it had successfully conducted a mid- to-long-range missile test and would continue such launches "any time, any place."
Yet major U.S. stock indexes moved higher on Monday, with the benchmark S&P 500 (SPX) touching a record high, as stocks continued to rally even as many investors worry about unbridled optimism and expensive valuations.
"I am really on pins and needles to be honest with you because there are so many threats to this stability and this complacency which have not yet been priced into the market," Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.
"It is just a question of what straw is going to break the camel’s back and then there is going to be all sorts of reasons that the market should have sold off," Kenny said.
While past cyber attacks may have had limited impact on the market, the WannaCry attack was described as having "unprecedented" global reach at a time people increasingly rely on technology to store their sensitive data. The attack follows hacking incidents during the U.S. and French elections.
"The cyber attack I would have imagined would have created some nervousness and anxiety, and throw in North Korea over the weekend, I'm confused on why the market is doing what it's doing," Ken Polcari, director of the NYSE floor division at O’Neil Securities in New York.
U.S. equities continued to move upward on Monday, a trend that has been firmly in place since the U.S. presidential election in November. Helped by higher oil prices, the benchmark S&P 500 (SPX) rose 0.5 percent on Monday and set a new all-time high. In Europe, where the attack took center stage, investors also showed limited concerns. European shares closed higher while the UK’s FTSE 100 (FTSE) edged up to end at a record high.
Indeed, the main impact from the attack appeared to be a rush to own shares of cyber security firms, the Purefunds ISE Cyber Security ETF (P:HACK) up 3.2 percent, U.S.-listed FireEye Inc (O:FEYE) up 7.5 percent and Symantec Corp (O:SYMC) gaining 3.2 percent.
To be sure, market watchers said that cyber threats have typically had limited impact on the market. Nicholas Colas, chief market strategist at Convergex, a global brokerage company based in New York, said for the market to become concerned, an attack would need to be more narrowly targeted, such as hitting a company that consumers depend on such as Apple Inc (O:AAPL) or major banks.
"If you want to get U.S. investors' attention you'd have to shut down major banks' ATM systems," said Colas.
The market's ability to push higher underscored worries about investors being overly complacent and optimistic about the direction of stocks.
The S&P 500 has risen more than 12 percent since the election of President Donald Trump spurred by expectations that his tax cut proposals and planned infrastructure spending will help economic growth. While threats to Trump's plans have rattled investors they have failed to cause any significant pull back in stocks.
The CBOE Volatility Index (VIX), better known as the VIX and the most widely followed barometer of expected near-term stock market volatility, last week closed at 9.77, its lowest close since December 1993. On Monday, the VIX fell 0.11 point at 10.29.
"I'd say the market has been overly complacent for quite some time," said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut. "There are a lot of people shorting volatility, which means investors are not worried about much of anything right now."