Good morning, investors. It’s almost Friday, and today we’re covering the collapse of volatility in markets, the surge of bullish sentiment, a Middle East-fueled chip stock rally, and more.

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The fuel of greed

Historic fear is making way for unflinching greed in the stock market.

The S&P 500 notched its third winning day in a row on Wednesday, and the usual barometers of investor jitters have suddenly flatlined.

The Cboe Volatility Index (VIX), Wall Street’s so-called fear gauge, has cratered. It’s closed below 19 every trading day this week, a range that’s “solidly back in bull market territory,” said DataTrek Research.

The collapse has been dramatic. From April 10 to May 12, the VIX posted its sharpest decline on record, according to Bespoke Investment Group.

Just after President Trump’s Liberation Day speech, the VIX had closed above 52. 

Meanwhile, CNN’s Fear and Greed Index, which tracks a handful of technical and sentiment indicators, has jumped from an “Extreme Fear” reading of 3 in early April to a 70, well into “Greed” levels. 

As the chart below illustrates, investors today are more greedy than they’ve been in eight months. 

With animal spirits steering markets, momentum is arguably running a little hot. 

“After trading at some of the most extreme oversold levels we've seen in years back in April during the tariff crash, major US index ETFs have all moved in lock-step up into overbought territory,” said strategists at Bespoke Investment, noting that the Dow 30 is the exception to that statement. 

The Nasdaq 100, for its part, has extended into “extreme overbought” levels, which means more than two standard deviations above its 50-day moving average. 

Much of the newfound confidence stems from Trump’s tariff pause with China, though a string of cooler-than-expected inflation reports haven’t hurt. 

But with greed rising as fast as fear did in April, the risk now may be that markets are once again overshooting on sentiment. 

Market snapshot

Elsewhere

📉 What recession? The US-China tariff pause has led Wall Street firms to scale back their odds of a downturn, and many bearish strategists have now turned upbeat. The more sanguine outlook has provided a welcome boon for stocks. (Yahoo Finance)

🏦 401(k) giant Empower wants to provide private investments. The firm announced Wednesday it’s joined seven other companies including Apollo Global to start allowing private credit and real estate in some of its offerings. (WSJ)

📈 Chip stocks have loved Trump’s visit to the Middle East. Nvidia, AMD, and Qualcomm all unveiled massive deals over the last several days, and each of their share prices have jumped. The influx of overseas capital is the latest sign that the demand for AI hardware remains robust. (Yahoo Finance)

🎙️ If you want more daily briefings, our friends at The Flyover just launched a podcast — unbiased news on politics and business in 15-minute bites. Tune in on YouTube, Spotify, or Apple.

Rapid-fire

• Fed vice chairman Jefferson said Trump’s tariffs could cause “at least” a temporary inflation bump (Yahoo Finance)

• Boeing stock climbed after Qatar Airways signed a deal for 160 new jets during Trump’s visit to the Gulf Arab country (Reuters)

• Piper Sandler reports that options traders positioning for less turbulence in the coming weeks (WSJ)

• Tesla stock has soared 40% since it announced first-quarter earnings on April 22 (Barron’s)

• Optimistic investors who held through the April dip remain upbeat for what’s next (Opening Bell Daily)

• House Speaker Johnson backed a Congressional stock-trading ban (WSJ)

Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].