Wall Street Throws Caution to the Wind to Keep Up With Stock Rally
- Junk bonds and small caps rally as hedging demand evaporates
- Traders bet Fed done raising rates, will achieve soft landing
Traders work on the floor of the New York Stock Exchange.
Photographer: Michael Nagle/BloombergThis article is for subscribers only.
It’s the major casualty of November’s sizzling stock rally: Investor caution.
Thanks to what’s shaping up to be one of the biggest market meltups over the last 100 years, demand for protective strategies has all but evaporated. Professional and retail traders are battling to keep pace with an S&P 500 that has advanced almost 9% this month alone. Erstwhile defensive refuges — everything from inflation-protected bonds to cash ETFs and bearish options — are being jettisoned. In their place: Surging appetite for junk bonds and small-cap equities.