Stocks under pressure as correction fears grow and record rally defies geopolitical turmoil
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- S&P 500 is up 7.4% year‑to‑date and has risen almost 7% since the Iran conflict began in late February, hitting a new all‑time high last week.
- U.S. 10‑year Treasury yield has surged about 70 basis points since the war began, reflecting higher inflation expectations and interest‑rate hikes.
- Bank of America's fund‑manager survey shows equity allocations grew from a net 13% overweight in April to a net 50% overweight in May, but its Bull & Bear Indicator is near a sell‑signal and early June is ripe for profit taking.
- Barclays notes that U.S. equity funds have attracted $70 billion in net new inflows over the past seven weeks, a 97th‑percentile streak since 2000, but warns that a pendulum swing risks a near‑term unwind.
- MSCI World Ex USA index has recovered most of its wartime losses, now down about 3% from the start of the conflict, while the FTSE World Government Bond index has seen yields rise roughly 55 basis points.
Why it matters: Equity investors reap record gains as the S&P 500 climbs 7.4% YTD, but rising 10‑year Treasury yields (+70 bps) and fund‑manager sell‑signal warnings risk a swift pull‑back, hurting both stock and bond portfolios.
