The S & P 500 has been knocking on the door of its all-time high as trade tensions ease and the Iran-Israel conflict appears to be halted thanks to a ceasefire. Another counterintuitive driver could keep the gains going: neutral investor sentiment. Tom Essaye, founder of the Sevens Report, highlighted Thursday that investors haven’t become overly bullish in the S & P 500’s rebound from the April lows. He noted that the AAII Investor Sentiment Survey showed bulls at 33.2%, a slight decline from last month, while CNN’s Fear/Greed Indicator sits at 60%, only “slightly in the ‘Greed’ range.” On top of that, “Investors Intelligence Advisor Sentiment Survey has a Bulls/Bears spread of 10.2%, a still cautious reading,” he said. Yet, the S & P 500 sits less than 1% below its record high set in February, following a more than 20% bounce since the April 8 close. .SPX bar 2025-04-08 SPX since April 8 “This implies that, despite the impressive rebound, it is not being matched with the type of bullish sentiment we’d typically associate with a near-term top. As such, this remains a somewhat ‘hated’ rally from an investor standpoint and that implies it can keep going,” Essaye noted. Risks to the rally remain. If trade negotiations between the U.S. and other countries break down, and/or tensions in the Middle East spike again, the rally to record levels could be derailed. There’s also the Federal Reserve. Despite President Donald Trump’s gripes with Fed Chair Jerome Powell, expectations for Fed rate cuts this year have declined. BlackRock’s Rick Rieder said Wednesday he only sees two decreases , starting in September. For now, “sentiment remains much more balanced and neutral than the price action would imply. That’s a near-term positive as investors remain skeptical and that could well fuel continued upside as long as macro influences (tariffs, geopolitics, economic growth) remain broadly stable and don’t give us any negative surprises,” wrote Essaye.
The latest stock market rally has another driver in its favor
