From CNBC: 2025-04-23 11:59:00

The stock market rally is being driven by short sellers covering their losses, creating dramatic upswings. Short squeeze risks are real as traders scramble to limit losses. The rally, fueled by easing trade tensions and Trump’s comments, may lack long-term conviction as hedge funds remain cautious about buying into the rally.

Stocks surged on signs of easing trade tensions and Trump’s positive comments, with the Dow up 1,100 points and the S&P 500 rising 3.5% for the week. However, the rally may be fading as short squeeze boosts wane. Hedge funds are cautious about buying into the rally, signaling a lack of long-term conviction.

Read more: Credit a ‘short squeeze’ for the stock market’s big two-day bounce