Dancing on the Edge: The Bullish Sentiment in U.S. Markets

U.S. stock markets continue to soar despite warnings of potential overvaluation. Wall Street's main indices have hit record highs. Analysts advise cautious optimism due to possible risks from fiscal and trade policies. The 10-year Treasury yield remains a crucial threshold, with investor sentiment notably buoyant.

The bullish sentiment in U.S. stock markets remains high as Wall Street's main indices continue to break records, a rally driven by the Federal Reserve's shift away from interest rate hikes a year ago. The Nasdaq has seen gains over 50%, while Nvidia's stock price has surged a remarkable 250%.

Furthermore, corporate debt yield spreads over Treasuries have narrowed significantly, signaling potential overvaluation. Analysts from Morgan Stanley and HSBC maintain a cautiously optimistic outlook for U.S. equities, though they highlight immense uncertainty from new fiscal and trade policies under the upcoming administration.

Crucially, if interest rates surpass the 10-year Treasury yield threshold of 4.5%, it could lead to significant market disruption. Yet, investor optimism remains buoyant, driven by fear of missing out, despite analysts' mixed predictions for the future performance of the markets.

(With inputs from agencies.)