A recent survey from Bank of America reveals that investor concerns over U.S. stock valuations have dropped to their lowest level since February 2019, signaling a shift away from the long-standing anxiety around expensive equities. According to the bank's April Global Fund Manager Survey, a net 64% of respondents view U.S. stocks as overvalued. While this figure remains elevated, it marks a notable decline from the extreme pessimism that has dominated fund manager outlooks in recent years.
Simultaneously, the S&P 500 has fully recovered from losses triggered by geopolitical tensions surrounding Iran and now sits just about 1% below its all-time high of 7,000 points, reached on January 28. This rebound suggests that some of the accumulated worries about excessive valuation are gradually easing amid the geopolitical climate and an environment of higher-for-longer borrowing costs.
For much of the current economic cycle, U.S. stocks have been perceived as crowded, expensive, and difficult to justify from a valuation perspective, especially against the backdrop of the artificial intelligence boom. Earlier this year, optimism about corporate earnings helped Wall Street rebound from the Greenland crisis. The S&P 500 hit an intraday record high of 7,002.28 on January 28, marking the second-fastest 1,000-point climb in its history—taking just 14 months to advance from 6,000 to 7,000 points.
The shift in market sentiment is closely tied to easing geopolitical risks. U.S. President Donald Trump stated in an interview on the 14th that conflict with Iran is "nearing its end." When asked about his previous comments on the matter, Trump replied, "I believe it is very close to being over. Yes, I mean, I think it's very close to being over." This remark boosted market optimism and helped stabilize global energy prices.
Furthermore, after two consecutive days of declines, hopes have revived that the U.S.-Iran conflict could be resolved through negotiations, alleviating some inflation concerns. Iranian and U.S. delegations may resume talks later this week in Islamabad, Pakistan. Previous discussions held in Islamabad ended on the 12th without an agreement. The Iranian side described the talks as taking place in an "atmosphere of distrust and suspicion," with disagreements on two or three key issues. The U.S. stated it had clearly outlined its "red lines," but Iran did not accept the conditions.
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