Amidst the surge, is the alarm ringing? Indicators show that the risk sentiment in the U.S. stock market is "extremely greedy."

U.S. stocks rebounded strongly driven by technology stocks, with the S&P 500 index approaching historical highs, but the Fear and Greed Index has issued a signal of "extreme greed," indicating heightened market risk sentiment.

On Wednesday, according to CCTV News, U.S. President Trump announced tariff rates on six countries. Subsequently, Trump announced a 50% tariff on Brazil. Despite ongoing trade friction news, stock market traders ignored trade concerns. The S&P 500 index is just a stone's throw away from its record high, with large technology stock indices rising by 1.1%, and NVIDIA briefly surpassing a market capitalization of $4 trillion.

The Fear and Greed Index currently shows "extreme greed," which to some extent indicates that investors' risk appetite is prevailing. According to data from BNP Paribas, fast money investors, including commodity trading advisors, volatility-targeted funds, and hedge funds, are reallocating into U.S. stocks, with their stock holdings indicator steadily rising to slightly above neutral levels, providing support for further market gains into unknown territory.

Goldman Sachs strategists raised their outlook for U.S. stocks this week, citing factors such as the continued strength of America's largest companies as reasons for the market's potential to continue rising. Craig Johnson of Piper Sandler stated:

We believe the outlook for the stock market looks optimistic, even in the face of new trade war concerns. While the stock market may face some recent pressures, investors are becoming increasingly numb to tariff headlines and are instead focusing on trend lines (technical analysis).

However, Anthony Saglimbene of Ameriprise warned:

The risk of disappointment has now increased, especially after seeing the overall investment narrative rapidly change due to constant announcements from the White House.

Analysts believe that as the earnings season approaches, market focus will shift from tariff news to corporate earnings performance. Elevated investor expectations and significant gains since April may bring some volatility to the market.

Technology Stocks Lead the Rebound, NVIDIA Hits Historical High

The strong performance of large technology stocks has driven the overall market rebound.

NVIDIA briefly surpassed a market capitalization of $4 trillion, becoming the first company to reach this milestone, marking a strong rebound from spending concerns and trade war pressures triggered by DeepSeek at the beginning of the year.

Since the beginning of 2023, NVIDIA's stock price has risen by over 1000%. The company currently accounts for 7.5% of the S&P 500 index weight, nearing historical peak influence levels. According to Bespoke strategists, historically, large technology stocks tend to continue their upward momentum after reaching various trillion-dollar market capitalization thresholds. The rebound in risk appetite is also reflected in other asset classes. Bitcoin has first broken through the $112,000 mark, further confirming investors' enthusiasm for high-risk assets.

Alarm Bells Ring as U.S. Stocks Surge

According to CCTV News, Trump announced a new round of tariff demands on Wednesday, imposing a 50% tariff rate on Brazil, one of the highest levels announced to date, which will take effect in August.

In his letter to Brazil, Trump mentioned the treatment of former President Jair Bolsonaro, demanding that authorities withdraw the charges against him for alleged coup attempts.

Despite the continuous trade news, Mark Hackett from Nationwide stated:

The market has entered a calm period, despite the constant flow of trade headlines. As the market's reaction to tariff news becomes muted, the next catalyst will be the earnings season.

He pointed out that given the significant rise since April, high investor expectations, and the potential need for a consolidation period, this transition may be accompanied by some volatility.

Some analysts further warned that current market valuations have returned to cyclical highs, with investors showing strong preferences for risk assets. However, as the impact of tariff policies on corporate profits and consumer spending has yet to materialize, the market may need a more cautious approach.

Risk Warning and Disclaimer

The market carries risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk