The relentless <a href="https://www.thenationalnews.com/business/money/2023/05/16/is-big-tech-poised-for-a-comeback/" target="_blank">rally in Big Tech</a>, options positioning and <a href="https://www.thenationalnews.com/business/economy/2023/05/03/federal-reserve-interest-rates-meeting/" target="_blank">bets on a Federal Reserve </a>pause following a <a href="https://www.thenationalnews.com/business/economy/2023/06/02/us-jobs-report-may-2023/" target="_blank">mixed jobs report </a>put stocks on the <a href="https://www.thenationalnews.com/business/money/2023/02/07/is-this-the-beginning-of-a-new-bull-market/" target="_blank">verge of a bull market</a>. An advance of about 1.5 per cent for the S&P 500 extended the benchmark’s surge from its October low to nearly 20 per cent. A gauge of major companies like <a href="https://www.thenationalnews.com/business/technology/elon-musk-says-apple-s-tim-cook-refused-to-take-meeting-to-discuss-tesla-deal-1.1133706" target="_blank">Tesla and Apple </a>saw its sixth straight week of gains – the longest winning run since July 2021. Broadcom climbed after predicting that sales tied to artificial intelligence will double this year. As stocks rose, Wall Street’s “fear gauge” plummeted to pre-pandemic levels. The Cboe Volatility Index, or VIX, dropped below 15 from an average of 23 in the past year. The risk-taking mode also drove the Russell 2000 index of small caps – the home of several regional banks – up about 3.5 per cent. “The impressive run for equities continues to drive retail investors into the market,” said Mark Hackett, chief of investment research at Nationwide. “Investors have spent much of the past three years obsessed by the Fed, inflation and payrolls, though volatility around those reports has settled, reflecting a less emotional market. This is bullish, as less reactivity is a sign of a healthy market.” Andrew Brenner of NatAlliance Securities said the melt-up in equities has a lot to do with one thing: positioning. “Options traders were offsides,” Mr Brenner said. “We think they get back onsides next week, and the rally will run out of steam.” The stock advance doesn’t mean the market isn’t facing headwinds, said Quincy Krosby, chief global strategist at LPL Financial. Among the risks, she cites the potential ramifications of the deluge of Treasury notes – approximately $1 trillion – to be auctioned as the US department replenishes its general account. That follows a debt-limit deal that could ignite a significant sapping of liquidity from financial markets, she said. “That the Fed has telegraphed that June 14 is off the table for a rate hike no doubt reflects its concerns regarding the potential for increased market volatility stemming from dissipating liquidity,” Ms Krosby said. “Still, today’s across-the-board rally confirms that the market doesn’t see an impending recession despite the incessant calls for one.” Signs of labour market slackening in May despite a pick-up in hiring could strengthen the argument from Fed chair Jerome Powell and other officials that they should take more time to assess incoming data and the evolving outlook before raising rates again. Wall Street’s reaction to the latest jobs report showed bets that another Fed hike is likely – but that wouldn’t necessarily happen in June. Two-year yields, which are more sensitive to imminent central bank moves, jumped 16 basis points to 4.5 per cent. Some 25 basis points of tightening were fully priced in across the next two meetings for part of the trading session on Friday. Around nine basis points was priced in for June, indicating a less than one-in-two chance of any hike being at this month’s meeting. “The key question now is: can they wait until July or does this monster payrolls number trigger another burst of urgency?” said Seema Shah, chief global strategist at Principal Asset Management. “Perhaps the report details, with the unemployment rate rising and average hourly earnings growth slowing, tilts the decision to July.” The Fed should be open to raising interest rates by half of a percentage point in July if it opts to hold off from tightening this month, former Treasury secretary Lawrence Summers said. “We are again in a situation where the risks of overheating the economy are the primary risks that the Fed needs to be mindful of,” he said.