--- title: "Morgan Stanley and Goldman Sachs dissect the truth behind the big rebound in U.S. stocks: short squeeze rather than sentiment reversal" type: "News" locale: "en" url: "https://longbridge.com/en/news/281355657.md" description: "The trading departments of major institutions on Wall Street pointed out that the recent significant rebound in U.S. stocks is mainly due to short squeezes, rather than a shift in investor sentiment. The S&P 500 index rose by 2.9%, and the NASDAQ-100 index increased by 3.4%. Traders indicated that the main reason for the rebound was market participants closing short positions, and it is expected that pension funds will reallocate funds at the end of the month, further driving the stock market up. Experts from JPMorgan Chase emphasized that key events will affect investors' risk appetite and the probability of recession" datetime: "2026-04-01T11:18:56.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/281355657.md) - [en](https://longbridge.com/en/news/281355657.md) - [zh-HK](https://longbridge.com/zh-HK/news/281355657.md) --- # Morgan Stanley and Goldman Sachs dissect the truth behind the big rebound in U.S. stocks: short squeeze rather than sentiment reversal According to Zhitong Finance APP, after both the US and Iran signaled a de-escalation of tensions, the S&P 500 index soared 2.9% on Tuesday, marking its largest single-day gain since May of last year; the NASDAQ 100 index rose 3.4%, with the combined market value of the "seven giants" increasing by over $700 billion, the third-largest single-day gain since 2020. However, trading departments of major Wall Street institutions indicated that the extreme bearish position structure in the stock market prior to the quarter-end was the main driver of the significant rebound in US stocks on Tuesday, rather than a shift in investor sentiment regarding the prospects of the Middle East conflict. Traders at Goldman Sachs and JPMorgan Chase stated that the rise in US stocks on Tuesday was primarily due to a short squeeze, with the sudden rebound largely resulting from various market participants covering their short positions. It is reported that trend-following funds such as hedge funds and commodity trading advisors (CTAs) had been heavily shorting stocks. The trading departments of these major banks also predicted that pension funds would make large-scale reallocations at the end of the month, shifting towards buying stocks, while the negative Gamma pressure points held by options traders would gradually dissipate with the expiration of options on Tuesday, providing further upward momentum for the market. In short, from the perspective of these trading departments, fast money had been waiting for a "catalyst" to ignite the market, and Trump's remarks about the possibility of the war ending in two to three weeks were sufficient to trigger the rebound. JPMorgan's industrial sector expert, Paige Hansen, stated, "Since the outbreak of the war, investors have basically been betting that it will end quickly. However, from the perspective of the market or the global economy, it is more important to define what key events can truly prompt investors to take on risk again and reduce the probability of recession. How should we define this 'end' to relate it to the future path of the stock market and the global economy?" JPMorgan stock trader Brian Shive noted that the team responsible for trading in the technology and media sectors reported that overall fund flows on Tuesday were relatively light, and changes in negative Gamma positions helped push the index higher. He stated, "There are no signs in our fund flows indicating that this is anything more than an oversold/tactical rebound—at least not yet." Despite the clear upward trend at the index level, stock trading volume did not match this optimistic sentiment. Goldman Sachs traders rated the overall trading activity on Tuesday at only 4 out of 10. In Goldman Sachs' derivatives trading department, traders reported observing that "large hedging positions in the S&P 500 index, NASDAQ, volatility index, and ETFs were being unwound." Traders pointed out, "As the trading day progressed, positions continued to be withdrawn." To sustain this rebound, investors may need to see more details and clarity regarding the path to de-escalation. White House Press Secretary Levitt stated that Trump would deliver a national address at 9 PM Eastern Time on April 1 (9 AM Beijing Time on April 2) to provide an "important update" on the Iran issue. Traders remain focused on several key questions—when will shipping in the Strait of Hormuz be restored? How will the depth and duration of the decline in oil prices evolve? 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