Professional investors are facing a dilemma amid the resurgence of meme stock mania. Speculative stocks like Opendoor Technologies Inc. and Kohl’s Corp. saw gains but showed signs of fatigue while the S&P 500 and Nasdaq 100 hit all-time highs. Margin debt reached record levels. Some are cautious, expecting a pullback due to excessive speculation. The current run has stretched valuations.

Market watchers are comparing the recent meme stock moment to the GameStop Corp. and AMC Entertainment Corp. frenzy in January 2021. Retail traders drove the rally fueled by stimulus checks. The S&P 500 saw a 27% rise in 2021 but plunged 19% in 2022. It’s hard to predict when the market will turn.

Last week saw retail traders targeting shorted companies with high trading volumes, reflecting similarities to the 2021 frenzy. Interest rates are higher, but anticipation of a Fed rate cut may boost the rally. The current macroeconomic backdrop is different, with inflation in check and earnings growth intact.

The market is contending with higher tariff levels but deals with most countries have ended better than feared. Inflation seems under control. Fed rate cuts could boost equities. The meme stock frenzy is concerning, but markets trade on better or worse news. A brief pullback could present buying opportunities.

Read more at Yahoo Finance: Return of Meme Stock Mania Has Traders on Alert for Market Froth