S&P 500 Sits 0.5% From All-Time High as Capital Floods Back Into Equities

The rally on Wall Street is closing in on a major milestone. The S&P 500 is now just 0.5% from its all-time high of 7,002 recorded in January 2026

The index has turned positive for the year after a powerful rebound that has added nearly $6 trillion in market value since March 30. That recovery translates to roughly $550 billion per trading day over 10 consecutive sessions, with Tuesday marking the index’s green day.

The S&P 500 Nears Its All-Time High, and the Rally Isn’t Slowing Down

What makes the rebound particularly notable is that it began against a backdrop of geopolitical tensions between the US and Iran. Although both sides agreed to a two-week ceasefire, failed diplomatic negotiations and the US’s blockade of the Strait of Hormuz have continued to fuel uncertainty.

Even so, markets have shown remarkable resilience, with equities pushing higher despite the overhang of geopolitical risk.

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BeInCrypto reported that Citadel Securities executives see room for upside in both stocks and bonds, arguing that the worst-case tail risk from the Iran conflict has been “substantially truncated.” 

Separately, Bitmine’s chairman, Tom Lee, said last week that a stock market bottom is already in. He projected that the S&P 500 could climb as high as 7,300 to mark a new all-time high this year.

Hedge Funds Unwind as Sidelined Capital Returns

The shift in positioning tells the story. The Kobeissi Letter noted that in just five trading days, hedge fund short exposure to US ETFs dropped from the highest level since May 2025 to below the 97th percentile of cases over the last five years.

“Meanwhile, the capital that was sidelined amid the Iran War is quickly rotating back into AI stocks. Stocks like Nvidia and Apple were nearly half as cheap as Costco and Walmart on a Forward P/E basis after the recent correction,” the analysts said. All while 4% inflation is back and investors are searching for any source of yield as a hedge. Record highs are on the horizon.”

However, the rally is pushing valuation metrics into historic extremes. Global Markets Investor reported that the Buffett Indicator has risen to 232.6%. That marks the highest reading in history.

The indicator is used to assess whether a stock market is overvalued or undervalued relative to its underlying economy. A value above 100% usually indicates that the former is the case.

The current figure sits well above both the 2000 Dot-Com Bubble peak of 162.6% and the 2021 market high of 218.7%.

“Since the Great Financial Crisis low, the ratio has risen +163.6 percentage points, or more than 3 times. US equities are in uncharted territory,” the post revealed.

Overall, it points to a market that is historically expensive and potentially vulnerable to corrections. Thus, while momentum remains bullish and a fresh record high appears within reach, the backdrop is becoming increasingly complex.

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