The global stock markets have been soaring. They may have gone too far, too fast.

Gina Martin Adams, an equity strategist at Wells Fargo Securities, certainly thinks so. “I would definitely tread very lightly in stocks,” she said. At the moment, there appears to be enough momentum to keep propelling the rally forward until it “stumbles on some speed bumps,” she said, but she warned that stocks were no longer cheap, especially with the financial system and the economy still fragile.

At some point, and probably fairly soon, she said, a host of fundamental problems could pull stocks back down to earth — but, of course, she could not say when. “There’s a difference between where the market will trade and where it should trade,” she said.

Stocks have certainly come a long way since their March 9 lows, with the Standard & Poor’s 500-stock index rising 58 per cent in one of the most powerful upturns since the Great Depression. The recent rally, of course, followed the steepest decline in decades. The index stands at 1,068.30, still well below its October 2007 peak of 1,565.15.

A rebound of some sort was likely after the battering inflicted on financial markets during last year’s panic. In a speech on Wall Street last week, commemorating the anniversary of the collapse of Lehman Brothers, president Obama said the most acute phase of the financial crisis was behind us. But he cautioned that the economy remained weak with rising unemployment, and that a variety of emergency government programs would continue to play a significant role in keeping the economy afloat. And Ben S Bernanke, the chairman of the Federal Reserve, warned in remarks in Washington that while the United States was probably out of recession from a “technical perspective,” the economy would still “feel” very weak for some time.

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