Market Extra: Stock rally masks heightened risk in late leg of cycle

It may be hard for investors to admit it, but the post-election rally in U.S. stocks comes at a cost—it’s masking a sudden rise in the market’s heightened risk profile, according to analysts.

Investors are bidding up prices of stocks DJIA, +0.94% , while betting that tax cuts and deregulation will benefit corporations and fiscal spending will spur much faster economic growth. Markets are fully pricing in such an outcome, leaving little room for disappointment.

“The current behavior of the markets is one of not being too concerned with the future. The assumption on Wall Street so far has been that the extreme move since the election is the right move,” said Charlie Bilello, director of research at Pension Partners LLC.

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