As of early June 2025, U.S. equity markets continue to push higher, led by tech and AI-driven names. With the S&P 500 hovering around 6,000, investors are increasingly asking: Are we heading into a melt-up?

Strong Earnings Drive Optimism

• S&P 500 Q1 earnings grew approximately 6% year-over-year, beating expectations of around 3%.
• Nvidia (NVDA) posted a 427% year-over-year net income gain, driven by AI chip demand.
• Broadcom (AVGO) reported a 46% jump in revenue (Q2) and raised full-year guidance.
• Apple (AAPL) saw iPhone revenues rebound and services revenue hit a record $23.9 billion.
• Microsoft (MSFT) and Google (GOOGL) both exceeded cloud revenue expectations, with Azure and Google Cloud growing around 30% year-over-year.

This strong earnings foundation helps justify current valuations, even as price-to-earnings ratios remain elevated.

Institutional Money Returns

• According to MarketWatch (June 2025), institutional money managers are back in buying mode, with positioning shifting bullish after months of risk-off behavior.
• Retail investor cash allocations are at post-2014 lows, per AAII sentiment data.
• Hedge funds are heavily overweight large-cap tech, while fund flows into tech ETFs have spiked by over $5 billion in May alone.

Bonds Offer Little Competition

• The iShares U.S. Aggregate Bond ETF (AGG) is down nearly 4% year-to-date, as interest rates remain high.
• 10-year Treasury yields hover around 4.3%, while inflation-adjusted returns remain modest.
• Money market funds hold approximately $7.0 trillion, near record highs, suggesting ample liquidity—though much is corporate cash.

IPO Buzz Builds

• U.S. IPO volume rose 55% year-over-year in Q1, with 59 deals raising $8.9 billion, according to EY.
• Notable IPOs:
  • Circle surged 170% on its debut.
  • Omada Health jumped 21% in early trading.
  • CoreWeave is rumored to have priced at a 250% premium to initial guidance.

Still, IPO proceeds remain below the 2021 peak, and most offerings are in AI or fintech—underscoring the narrowness of the rally.

Sentiment and Risk Appetite

• The CNN Fear & Greed Index is in “Greed” territory, but not extreme.
• The VIX (volatility index) sits near 12, showing investor complacency.
• Analysts from Goldman Sachs and JPMorgan have flagged a potential “melt-up” risk if Fed dovishness aligns with sustained AI enthusiasm.

Bottom Line

With robust earnings, renewed institutional inflows, low bond returns, and rising speculative appetite, the market has all the ingredients for a melt-up scenario. While valuations are stretched and gains are concentrated, investor behavior suggests that FOMO could drive prices even higher—at least in the near term.