Massive Short Squeeze Fogs Market’s View on Iran Peace Prospects
The S&P 500 Index surged 2.9% on Tuesday, the sharpest gain since May.
Photographer: Bloomberg/BloombergAt first blush, the biggest rally for US stocks in more than 10 months suggests investors on Tuesday were suddenly overwhelmed by optimism that the Iran war would be ending soon. Yet there was something else at play that obscures how confident investors really are that peace is on the horizon: A massive short squeeze.
A Goldman Sachs Group Inc. basket of the 50 most-shorted stocks soared 7.1% for its second-biggest rally in almost a year, and more than twice the gain of the S&P 500 Index. An index of profitless technology firms jumped 6.6%. Risk-on momentum continued on Wednesday, with the S&P 500 rising 0.8% at 9:40 a.m. in New York and Europe’s main equities gauge adding 2.3%.