(Bloomberg) \u2014 Even after Friday\u2019s stock dip, Wall Street\u2019s risk-on momentum train is barreling into September at full steam \u2014 and few investors are showing signs of hesitation.<\/p>\n
Markets barely flinched this week \u2014 despite fresh political pressure on the Federal Reserve and tepid Nvidia Corp. revenue guidance \u2014 until a tech-led pullback Friday, amid thin trading. Yet the late-week wobble only offered a flicker of doubt in an otherwise resilient summer, with the S&P 500 notching a fourth straight monthly gain.<\/p>\n<\/p>\n
Most Read from Bloomberg<\/p>\n
Risk appetite continues to spill into nearly every corner of markets, from corporate bonds and cryptocurrencies to cyclical currencies. The rationale feels deceptively simple: the Fed looks poised to cut interest rates, the US consumer has so far proved the doubters wrong, and the artificial intelligence story still commands momentum.<\/p>\n
That logic has proven resilient even in the face of mounting risks. Trade frictions, a cooling labor market and conflicting bond signals haven\u2019t derailed the rally. If anything, they\u2019ve hardened bets that monetary support is imminent \u2014 and that the expansion, while aging, still has legs.<\/p>\n
One way to dissect the bullishness is a cross-asset momentum gauge maintained by Societe Generale SA. It blends 11 components, including copper versus gold, cyclical stocks versus defensive, crypto, high-yield bonds and more. It has flirted with the most bullish thresholds at least five times since the tariff-spurred fallout in April \u2014 including again this month.<\/p>\n
\u201cInvestors are realizing that the impact of tariffs is not as catastrophic as initially feared and that\u2019s giving them more confidence \u2014 a confidence now underscored by solid fundamentals,\u201d said Omar Aguilar, CEO of Charles Schwab Investment Management Inc.<\/p>\n
Then there\u2019s volatility \u2014 or the lack of it. Short-term implied volatility across major assets has fallen below long-term averages, reaching levels not seen consistently in around four years, according to Cboe Global Markets. It\u2019s a stretch of cross-asset calm that belies the disruption from the shock jobs report just weeks ago. With US growth revised up to 3.3% last quarter, investors have another reason to stay the course.<\/p>\n
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For Mandy Xu, this prevailing calm is rooted in the economic story.<\/p>\n
Story Continues <\/p>\n
\u201cDespite all the tariff chaos, the consumer has held up, inflation is still in check and the Fed is about to cut,\u201d said Xu, Cboe\u2019s head of derivatives market intelligence. \u201cUntil that narrative changes, I think volatility is likely to remain in check in the near-term.\u201d<\/p>\n
Even a well-supported rally can start to look overconfident, as Friday\u2019s stumble made clear. Still, the S&P 500 ended the week only 0.1% lower, for all the noise. Junk bonds extended gains for a fourth week, as 10-year Treasury yields advanced.<\/p>\n
\u201cHaving every asset decline simultaneously in terms of volatility is a sign of complacency,\u201d said Peter van Dooijeweert, head of strategic investment partnerships at Capstone Investment Advisors. \u201cThe Fed appears to be under severe pressure from the administration and the economic impact of tariffs over the next 12 months is not clear yet. The market seems too relaxed given how much uncertainty remains ahead.\u201d<\/p>\n
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Yet that caution hasn\u2019t translated into investor retreat. Many see this not as ignorance, but a studied surrender to a market that has humbled skeptics all year. Calling it complacency is easy \u2014 stepping aside, harder.<\/p>\n
Case in point: Data from Barclays Research shows that institutional investors ramped up equity buying in August, led by hedge funds, commodity trading advisors and risk-control funds as volatility collapsed \u2014 dubbed an \u201cunusual\u201d re-risking that has pushed overall positioning to above-average levels.<\/p>\n
\u201cThe only way to spook the market is if interest rates go up or if tech stocks really show a decline in the rate of growth,\u201d said Max Wasserman, co-founder and senior portfolio manager at Miramar Capital. \u201cI am not optimistic about this overall market because it\u2019s dominated by a handful of stocks.\u201d<\/p>\n
A dividend-growth investor, Wasserman holds Microsoft Corp., Broadcom Inc. and Alphabet Inc., which together make up about 15% of his portfolio. While his other holdings have been \u201clanguishing,\u201d he\u2019s hedging with energy \u2014 which he expects to benefit from a weaker dollar \u2014 and healthcare.<\/p>\n
His concern isn\u2019t just valuations. It\u2019s crowding.<\/p>\n
A similar caution can be heard among credit participants. James St. Aubin, chief investment officer at Ocean Park Asset Management, said he\u2019s holding positions where momentum still looks strong. But with long-term rates proving unpredictable, he\u2019s wary of chasing further gains. \u201cIt\u2019s a bad set up for risk taking right now, no matter where you look,\u201d he said. For now, he\u2019s focused on clipping steady income \u2014 and staying nimble if conditions shift.<\/p>\n
The strongest and most consistent signals are coming from the riskier corners of credit and equity markets, according to Manish Kabra, chief US equity strategist at SocGen. Crypto assets and cyclical currencies like the Australian dollar and Swedish krona are also flashing green. Commodities \u2014 particularly the copper-to-gold ratio and oil \u2014 have delivered the most uneven readings.<\/p>\n
Against this backdrop, some investors are using the calm to rotate \u2014 quietly, deliberately \u2014 into less obvious corners of the market. At Schwab, Aguilar and his team recently rotated into small caps, betting the segment would benefit most from imminent Fed easing. Earlier this summer, they added exposure to the middle of the fixed-income curve to lock in yield before rates fall. At the start of the year, they shifted into international equities, looking for diversification and upside in regions less tethered to US policy.<\/p>\n
\u201cGiven that all the activity we have seen this summer, I think the rally is healthy,\u201d he said. But \u201cI would not be surprised if we see a pullback.\u201d<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
\u00a92025 Bloomberg L.P.<\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg) \u2014 Even after Friday\u2019s stock dip, Wall Street\u2019s risk-on momentum train is barreling into September at full…\n","protected":false},"author":3,"featured_media":186072,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[3638,64,75575,104354,1597,267,59671,135,104356,147,104355,67,132,68],"class_list":{"0":"post-186071","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-bloomberg","9":"tag-business","10":"tag-cboe-global-markets","11":"tag-cyclical-stocks","12":"tag-federal-reserve","13":"tag-interest-rates","14":"tag-market-intelligence","15":"tag-markets","16":"tag-max-wasserman","17":"tag-nvidia-corp","18":"tag-omar-aguilar","19":"tag-united-states","20":"tag-unitedstates","21":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115115179686324404","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/186071","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=186071"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/186071\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/186072"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=186071"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=186071"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=186071"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}