U.S. stocks accelerate upward. Is the bull market back or just a flash in the pan?

Investors who bravely bottomed out last month are now reaping the rewards. But has this strong rebound in the U.S. stock market come too quickly and too fiercely?

Some Wall Street professionals are beginning to express concerns about the current market sentiment. According to the Zhitong Finance APP, Michael O'Rourke, Chief Market Strategist at Jones Trading, stated in an interview: "What we are seeing now is an emotion-driven rally, with people chasing prices and fearing they might miss out on opportunities."

Since hitting a temporary low on April 8, the S&P 500 index has rebounded over 17% as of Tuesday's close, a rare surge in the past 75 years. According to data from Birinyi Associates, there have only been six instances since 1950 where short-term returns matched the gains of these six weeks. After each similar rebound, the returns over the next 12 months have almost always been very strong. The most notable example is the market recovery following the sharp decline at the beginning of the COVID-19 pandemic, where the S&P 500 rose by 46% in the subsequent year.

Nevertheless, uncertainties remain in the market's future. Some investors believe that the stock market may revisit the lows of April. Wall Street legend Paul Tudor Jones stated that as the economic impacts of Trump's tariff policies gradually become apparent, the stock market may return to lower levels within the year.

Mark Hackett, Chief Market Strategist at Nationwide, pointed out that the current valuation of the U.S. stock market remains high, with the expected price-to-earnings ratio of the S&P 500 reaching 21 times. In an email comment, he wrote: "The market has surged from oversold to overbought at a record pace."

On the technical indicators front, the relative strength index (RSI) of the S&P 500 exceeded 70 on Wednesday, entering the overbought territory. On April 4, just before Trump announced a 90-day suspension of tariffs, this index had dipped below 30.

While some are concerned about an overheated market, bullish investors can still find reasons to continue increasing their positions. Trump has rolled back many tariff decisions that could have significantly impacted the economy, and most expect he will not reinstate those harsh tariff policies, at least not to the extent announced on April 2.

On the other hand, hedge funds and institutional investors that sold in April or did not enter the market are now facing pressure to "catch up," being forced to chase prices.

Trade negotiations between the U.S. and the U.K., as well as between the U.S. and China, have also released some positive signals. Trump announced a 90-day suspension of certain tariffs on China, significantly cooling the trade war. According to JP Morgan data, the current effective average tariff rate in the U.S. has dropped from nearly 24% to 14.4%. Although this level is still higher than the state at the beginning of 2025, it is significantly lower than the peak a few weeks ago.

Optimism also stems from the fact that most of the currently released economic data has not yet shown substantial impacts from tariffs and policy uncertainties on the job market or consumer spending. However, complete data for April has not yet been fully released, and many economists believe that negative impacts may take longer to fully manifest Melissa Brown, Managing Director of the Investment Decision Research Department at SimCorp, pointed out: "Small and medium-sized enterprises are likely to have been affected and will find it difficult to recover in the short term."

The future tariff policy of the White House still has many unresolved mysteries. Although the market generally speculates that the tendency for "Trump put options" remains, this policy direction still has uncertainties.

In particular, national security tariffs targeting semiconductors and pharmaceutical products remain a focal point for investors. Oluk revealed that the U.S. Department of Commerce was asked to initiate relevant investigations in early April. If the government truly implements these high tariff measures targeting sensitive industries, it could once again trigger market turmoil.

This uncertainty also highlights a core risk: just one post from Trump on Truth Social could cause the market to fluctuate sharply. Oluk also stated: "I am beginning to doubt whether the president has backed off on the tariff issue due to last month's market volatility."

In addition to the stock market, the dynamics of the bond market have also drawn attention. The yield on the 10-year U.S. Treasury bond quietly rose above 4.5% on Wednesday, returning to the level that triggered market panic last month and forced Trump to suspend tariffs. Bond prices are inversely related to yields, meaning that rising yields indicate falling bond prices.

George Cipolloni, Portfolio Manager at Penn Mutual Asset Management, stated: "Long-end yields are rising, which could become the key to our next round of market battles."

As of Wednesday, the overall performance of U.S. stocks was mixed, with the S&P 500 slightly up, the Nasdaq index showing a larger increase, while the Dow Jones Industrial Average and the small-cap Russell 2000 index fell