Market Sentiment - The recent strong rebound in the U.S. stock market has raised concerns among some Wall Street professionals about the rapidity and intensity of the recovery, with a notable sentiment-driven surge as investors fear missing out on opportunities [1][2] - The S&P 500 index has rebounded over 17% since hitting a low on April 8, marking one of the rare instances in the past 75 years where such a short-term return has been recorded [1] Valuation Concerns - The current valuation of the U.S. stock market remains high, with the S&P 500's expected price-to-earnings ratio at 21 times, indicating a rapid shift from oversold to overbought conditions [2] - The relative strength index (RSI) for the S&P 500 has exceeded 70, placing it in the overbought territory, compared to a low of below 30 earlier in April [2] Institutional Investor Behavior - Hedge funds and institutional investors that sold in April or did not enter the market are now feeling pressure to chase the rally, indicating a potential shift in market dynamics [3] - Positive signals from trade negotiations between the U.S. and China, including a 90-day suspension of certain tariffs, have contributed to the optimistic sentiment [3] Economic Data and Impact - Most economic data released so far has not shown significant negative impacts from tariffs or policy uncertainties on the job market or consumer spending, although economists caution that negative effects may take longer to manifest [3] - Concerns remain regarding the potential impact on small and medium-sized enterprises, which may have already been affected and could struggle to recover in the short term [3] Future Uncertainties - There are uncertainties regarding future U.S. tariff policies, particularly concerning national security tariffs on semiconductors and pharmaceuticals, which could lead to market volatility if implemented [5] - The bond market dynamics are also noteworthy, with the 10-year U.S. Treasury yield rising above 4.5%, which could signal the next phase of market challenges [5]