S&P 500 Rally Has Room to Run, Bulls Argue
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- S&P 500 has logged a "really strong upward thrust" over the past two weeks, with Carson Group's Sonu Varghese calling new highs "a sign of momentum"
- Volatility-linked funds that sold stocks in March have flipped to net buyers, with CTAs purchasing roughly $20 billion in equities and levered ETFs adding $27.5 billion in the past week alone, per Nomura estimates
- Nomura strategist Joanna Wang noted systematic positioning in U.S. equities "still remains historically light," leaving room to rebuild before becoming a source of instability
- Call skew on 3-month options swung from the most defensive reading in nearly three years to the most bullish in three months in just three weeks, as investors aggressively chase upside (Susquehanna's Chris Murphy)
- Reuters analysis of LSEG data since 1957 shows that in roughly two-thirds of 38 instances when the S&P 500 overcame a 5%-9.9% pullback, stocks were higher two weeks and one month later, with median returns of 0.66% and 1.01% respectively
- Steve Sosnick (Interactive Brokers) flagged a stark disconnect: oil futures up $30, bond yields up ~35 bps, rate-cut expectations evaporated, and consumer sentiment at record lows—yet major equity indices are at all-time highs, concluding "when momentum rules, fundamentals are optional"
- Allbirds shares surged more than five-fold on Wednesday after the footwear maker announced a pivot toward AI computing infrastructure, cited as another sign of investor risk appetite
Why it matters: The rally is mechanical: CTAs and levered ETFs absorbed roughly $47.5 billion in U.S. equities last week alone, per Nomura. The 1957-2025 record favors gains after 5-10% pullbacks, but Sosnick's framing warns that with oil +$30, yields +35 bps, and record-low sentiment, the burden of proof for these highs is unusually high.
