The movement of U.S. stocks over the past two weeks is truly astonishing. The Nasdaq has risen for 11 consecutive trading days, surging by just 15% in only two weeks. The S&P 500 also broke through 7,000 points for the first time, reaching 7,022 points. This is a classic short squeeze phenomenon.

Looking back, Wall Street two weeks ago was completely dominated by a bearish mood. The worsening Middle East situation, concerns about inflation, and the entire market was engulfed in extreme fear. It’s honestly surprising how quickly this has reversed.

The main drivers of this market rally are, of course, the tech giants. Especially Tesla, which soared 7.62% in a single day. The trigger was Elon Musk announcing that the mass production design phase of the AI autonomous driving chips had been completed. In other words, the market is beginning to reevaluate Tesla not just as a car manufacturer but as an AI computing company.

Microsoft also cannot be overlooked. It rose 11% in just three trading days, increasing its market capitalization by nearly $300 billion. As a giant in cloud computing, it is reaping the benefits of the AI boom. Apple also gained 3%, and NVIDIA, Google, and Meta were all widely bought.

Quantum computing-related stocks are also skyrocketing. D-Wave Quantum surged over 22%, Rigetti Computing and Arqit Quantum each jumped 13% and 16%, respectively. Retail securities stocks also recorded gains of over 10%. Chinese stocks are not lagging behind. The Nasdaq China Golden Dragon Index rose for four consecutive days, with Baidu and NetEase up 2%, and Xiaoma Zhixing nearly 8%.

The cryptocurrency market is also participating in this frenzy. Bitcoin broke through $76,000, and Ethereum rose more than 2.5%.

So, what is causing this dramatic reversal? The answer is simple—Fear Of Missing Out, or FOMO. The moment potential black swans disappear, the accumulated liquidity suddenly flows out.

First, geopolitical risks have dramatically eased. The U.S.-Iran conflict is moving toward reconciliation, with both countries agreeing to a ceasefire. Face-to-face talks are also being considered in Islamabad, Pakistan. As confidence returns to the Strait of Hormuz for tankers, funds have stopped risk aversion and flooded into risk assets.

Next, the earnings season is performing well. Morgan Stanley and Bank of America announced better-than-expected earnings. Particularly, Morgan Stanley’s equity trading division achieved record quarterly results, with stock prices soaring over 4%. The strong performance of major banks has also alleviated concerns about weakness in the consumer market.

However, behind this glamorous rally, warning signals still remain. The Fed’s new “Beige Book” points out that rising energy costs due to the Middle East war are spreading through the entire supply chain, representing the biggest uncertainty facing the U.S. economy right now. Many companies are holding back on hiring and capital investments.

The Fed’s stance is also ambiguous. While Treasury Secretary Yellen hints at the possibility of rate cuts, St. Louis Fed President James Bullard has stated, “The risk that higher oil prices will push up core inflation may mean that keeping interest rates steady for now is the best course.”

The current market is undoubtedly at a sentiment peak. As analysts say, “Markets rarely wait for all information to be fully available.” Therefore, while enjoying this upward trend driven by emotion and liquidity, it’s important to maintain a degree of calm. To avoid being the ones who buy at the top at the next turning point.