Institutional Investors Turn Bullish On Stocks As S&P 500 Nears Record High

Large institutional investors such as hedge funds and university endowments are once again bullish on U.S. stocks as the benchmark S&P 500 nears an all-time high.

State Street’s (STT) Institutional Investor Risk Appetite index shows that the so called “big money” is now embracing the stock market rally as the S&P 500 tries to remain above 6,000 and reach a fresh record.

A majority of institutional investors were reducing risk from mid-March through late May and largely sitting on the sidelines during the current stock market rebound that began in April.

But now, with the S&P 500 having climbed back above both its 50-day and 200-day moving averages, institutions are redeploying capital into the stock market, says State Street.

The S&P 500 index recently closed at 6,000.36, its highest level since February and just 2.3% below its all-time high reached on Feb. 19 of this year.

Now, with institutions coming off the sidelines, it could result in what’s known as a market “melt up,” which happens when new money floods into the market, pushing stock prices higher.

The S&P 500 is currently trading at 22.7 times consensus 2025 earnings estimates, which is pricey and requires conviction on the part of investors that multiples will expand further.

U.S. markets have enjoyed a strong rebound after being shaken by tariff worries in April of this year.

The U.S. market is now back in positive territory for the year, even as trade and macroeconomic uncertainty remain high.

Despite some short-term drops, the U.S. stock market has been in a bull rally since the fourth quarter of 2022, says State Street.

The stock of State Street has risen 0.93% this year to trade at 98.86 U.S. per share.