The surge in leading technology stocks is astonishing, "retail investor riot" reappears, is the US stock market sprinting into a bubble?

The summer rebound in the US stock market continues to push valuations to record levels, raising warnings from analysts about market bubbles. Even under the threat of tariffs, signs of bubbles in the market have been increasing recently. The S&P 500 index has repeatedly hit historical highs this month, with overvalued tech stocks soaring to new heights, Nvidia's market value surpassing $4 trillion, Bitcoin's price climbing above $120,000, and the resurgence of the "Meme stock" craze from 2021. Dan Ivascyn, Chief Investment Officer of Pacific Asset Management, stated that the current market is beginning to show early similarities to the internet bubble of the late 1990s and early 2000s, and a dangerous "lottery mentality" is forming. Wall Street Journal previously mentioned that major Wall Street firms, including Goldman Sachs, Deutsche Bank, and Bank of America, have sounded the alarm, believing that current market speculation is surging, leverage levels are skyrocketing, and bubble risks are accumulating. What will happen next? Goldman Sachs' research indicates that market euphoria may become even more extreme for a period of time. In the past 35 years of data, whenever speculative trading sharply increased, the S&P 500 index often saw above-average returns in the following 3 months, 6 months, and 12 months, but afterward, the market typically experienced a pullback or decline. Market Indicators Sound Alarm Signals Data shows that the price-to-sales ratio of S&P 500 constituents has now exceeded 3.3 times, setting a new historical high. This indicates that investors' pricing of stocks has reached unprecedented levels. Barclays' "Stock Market Frenzy" indicator shows even more severe signals. This composite indicator, which incorporates derivatives flows, volatility, and market sentiment, has surged to twice the normal level, entering a region historically associated with asset bubbles. Stefano Pascale, head of US equity derivatives strategy at the bank, stated: "This indicator clearly shows that the market is in a frenzy." Rob Arnott, founder and chairman of Research Affiliates, pointed out that the S&P 500 index's price-to-sales ratio, price-to-earnings ratio, price-to-book ratio, and dividend yield are all close to historical record levels. He referred to the large-scale investment in large tech stocks as "picking up coins in front of a steamroller." "Retail Investor Riot" Reappears, Crypto and Meme Stocks Soar Together Last week, Bitcoin broke through the $120,000 mark, with companies and investors continuously pouring into crypto assets, pushing them into the mainstream financial market. At the same time, the 2021 "Meme stock" craze has revived, with retail investors flocking to stocks like GoPro and Krispy Kreme, driving their short-term surges, reflecting heightened market speculation. Goldman Sachs warned that high-risk activities in the US stock market are increasing, with indicators measuring market speculation soaring to historical highs, second only to the 2000 internet bubble and the 2021 retail investor frenzy Deutsche Bank warned that the scale of investors borrowing money to trade stocks has become "too hot," with margin debt totaling over $1 trillion in June, a historic high. Bank of America’s Hartnett also reiterated the risk of a bubble, pointing out that monetary easing and relaxed financial regulations are driving up the level of speculation. He stated, "The larger the retail investor base, the greater the liquidity, the greater the volatility, and the larger the bubble." Tech Giants Lead the Bubble Market Since the beginning of this year, large tech stocks have been the main force behind the rebound in the U.S. market. Nvidia and Meta have risen 100% and 50%, respectively, since their intraday lows in April. Arnott believes: "The market is pricing companies currently leading in AI as if they will have no competitors in the future." At the same time, investors remain cautious about distancing themselves from popular bubble stocks, as Arnott pointed out, "because if the timing is too early, you will get stuck." Corporate Credit Market Also Overheated The market's exuberance has spread to the corporate credit sector. The extra yield on high-rated U.S. corporate bonds relative to benchmark U.S. Treasuries has narrowed to 0.8 percentage points, close to the lowest level since 2005. Deutsche Bank analysts questioned in a report on Thursday whether the increase in borrowing to purchase stocks could be a sign of the "most exuberant frenzy" since 1999 and 2007. Although the stock market seems immune to concerns about excessive borrowing by the U.S. government and the independence of the Federal Reserve, these worries have impacted U.S. Treasuries and the dollar. So far this year, the dollar has fallen nearly 10% against a basket of currencies. JP Morgan and UBS strategists warned that the market may be overly complacent about persistent trade risks, with next week's focus shifting to the Federal Reserve's policy meeting for clues on the path to interest rate cuts