This isn't a stock market rally. It's a scramble

Catherine Baab

Wed, May 14, 2025, 7:12 AM 3 min read

On the backmost of marketplace rallies implicit the past fewer weeks, the Nasdaq is present up conscionable implicit 1% year-to-date. The S&P 500? Flat. The Dow Jones Industrial Average? Down 0.6%.

Some are cheering the indexes for “making up” the losses triggered by April’s alleged “Liberation Day.” But it each seems similar a batch of moving to enactment successful place, particularly erstwhile factoring successful the worsening import-export numbers and the deepening trade deficit, brought connected by policies ostensibly aimed astatine accomplishing the opposite.

And gold, Wall Street’s favourite panic button? It’s up immoderate 20% successful 2025.

In first-quarter net calls, almst each CEO fell backmost connected immoderate saltation of the operation “macro uncertainty.” Most tried to debar provoking nonstop retaliation from the White House, adjacent arsenic subtle unit mounted successful some directions, arsenic if Wall Street and the West Wing were pulling astatine other ends of the aforesaid balloon.

That depends connected who you ask, and when. The Fed remains cautious. Consumer assurance is softening. And portion AI-fueled mega-cap enthusiasm keeps juicing parts of the market, small- and mid-cap fundamentals stay murky.

Trade flows are shifting but not intelligibly successful favour of U.S. producers. Even the services surplus, a longtime agleam spot successful U.S. trade, appears to beryllium slipping arsenic cardinal partners turn wary of erratic negotiations and awesome cooling request for American expertise. In the existent environment, less planetary students are looking to study successful the U.S., portion planetary tourism numbers are likewise slipping.

As of mid-May, recession fears are fading, astatine slightest successful the prediction markets. Kalshi traders present peg the accidental of a U.S. recession this twelvemonth astatine just 37%, down sharply from astir 70% successful aboriginal May. The reversal follows the U.S.-China tariff pause, which investors interpreted arsenic de-escalation, though it mostly restores the presumption quo. Goldman Sachs (GS) and others person trimmed their recession odds successful caller days too, arsenic markets climbed backmost to flat.

A caller memo from Jefferies (JEF) connected Wednesday greeting calls this an “unloved rally,” driven mostly by abbreviated covering alternatively than outright bullishness. Just a period ago, positioning successful U.S. equities and the dollar was the astir bearish since astatine slightest 2014, per Jefferies’ data. As tariff headlines improved, investors were forced to unwind bearish bets, pushing stocks higher. Today, positioning is person to neutral, according to the aforesaid analysts, but inactive underweight by humanities standards.

In that light, the rebound looks little similar condemnation and much similar a scramble.