S&P 500 Rally’s Next Leg Seen Fueled by Big Buyers on Sidelines

Group 1 - The appetite for equities among large investors is decreasing due to concerns that the current rally may be unsustainable, which could be beneficial for the bull market [1][2] - Professional allocators are showing skepticism, while retail investors are experiencing euphoria as the S&P 500 approaches its sixth consecutive monthly gain, suggesting that the cash held by professionals could fuel further stock rallies [2][3] - Factors contributing to the skepticism include the ongoing US government shutdown, persistent trade tensions with China, and caution surrounding the artificial intelligence sector [3][4] Group 2 - At Deutsche Bank AG, a measure of aggregate equity positioning has shifted from moderately overweight to neutral, indicating a significant reduction in stock exposure among discretionary investors [4] - "Fast money" investors have exhibited a pronounced risk-off sentiment, with long-short hedge funds reducing net leverage to 50.7%, the lowest level in three years, while offloading stocks at a rapid pace [5]