Private wealth manager Atlantic Trust has said US stock markets are not in a bubble despite the Dow Jones Industrial Average and S&P 500 breaking records on a daily basis.

Wealth manager Atlantic Trust has said US stock markets are not in a bubble despite the Dow Jones Industrial Average and S&P 500 reaching new highs.

“Are we in another bubble? Our response is no, but given the destruction over the last 15 years from the bursting of the tech, credit and housing bubbles, this question is always a wise one to ask,” said David Donabedian, chief investment officer at Atlantic Trust.

"By virtue of its duration and current valuations, equities are in the mature phase of a bull market. That means a more sober pace of advance, with a lot riding on the economy and monetary policy," Donabedian added.

Not everybody shares Donabedian's confidence. This week Mohamed El-Erian - chief economic advisor at Allianz SE - told Bloomberg that the Fed has been pushing stock and bond prices up to "bubblish" levels - hoping that they will trigger the kind of consumer spending, physical investments and hiring required to subsequently justify them.

“The hope is that the convergence will occur in the context of full employment and inflation near the Federal Reserve’s target of 2 per cent,” he said.

“So far, though, the wedge between asset prices and economic reality remains large, as last week's juxtaposition of new stock-market highs and still-anemic wage-inflation data demonstrated. The danger is that the economic recovery will ultimately fail to validate artificially high asset prices, leading to significant financial instability and adverse 'spillback' for the economy,” he warned.

Atlantic Trust did say that the Fed had played a significant role in the current bull market run.

“There is no question that the extraordinary measures of the Fed and other central banks have been a huge catalyst for the equity bull market in recent years,” Donabedian said.