Steve Hanke: U.S. Stocks in Bubble as Big Tech Fuels $10T Rally
Steve Hanke says his Bubble Detector and the bond-stock yield spread show U.S. stocks are in bubble territory after five mega-cap techs added about $10 trillion in 39 days.
Economist Steve Hanke, an applied economics professor at Johns Hopkins and a former senior economist in the Reagan administration, said his Bubble Detector shows the U.S. stock market is in bubble territory and that the bond-stock yield spread offers a second confirmation. “My Bubble Detector says the US stock market is in bubble territory. So does the bond-stock yield spread. Buckle up,” Hanke warned.
Analysts estimated U.S. equities gained about $10 trillion over a 39-day stretch through early May. During that period the Nasdaq surpassed 29,000 for the first time and was roughly 27% above the March 30 low. The S&P 500 rose about 17% in the same window.
Market gains were highly concentrated. Alphabet, Nvidia, Amazon, Broadcom and Apple together accounted for about half of the S&P 500’s gains since April 1, contributing roughly six percentage points to the index’s near 12% advance over that span. Alphabet led the group with a 38% increase, followed by Amazon near 30%, Broadcom about 33% and Nvidia about 21%. The equal-weighted S&P 500 rose around 6% in the same period.
Options and retail activity showed elevated risk appetite. Call option notional on S&P 500 products reached a record $2.6 trillion on a single day, and calls represented about 58% of all S&P 500 options traded. Individual investors bought about $1.1 billion of tech hardware shares in the week ending May 6, the second-largest weekly total on record and the fifth consecutive week of net inflows into the sector.
Some individual stocks also posted extreme moves. SanDisk shares rose roughly 3,700% over the past year.
Market technicians pointed to earnings and corporate spending on artificial intelligence as factors behind the rally in the largest tech names. Mark Newton, head of technical strategy at Fundstrat, noted those stocks had traded mostly sideways for months before the recent leg higher and that positive earnings and AI capital expenditures coincided with renewed momentum.
Hanke has previously warned of overvaluation in U.S. equities and projected similar risks through 2025 and 2026. Observed market indicators include concentration of gains in a small set of companies, record call option activity and sustained retail inflows.
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