NY Times - Rally driven by FOMO money managers + short sellers

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Some of the buyers are opportunistic hedge fund traders and mutual fund managers, driving sharp gains for blue-chip shares that were battered by the market sell-off. Some are traders feeling pressure to get into a rising market. And some are short-sellers forced to buy to minimize their own losses.

“This is trader and professional money driving this market,” said Scott Wren, a managing director at the Wells Fargo Investment Institute.

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Mom-and-pop investors have largely been sitting out — a sign that the rally doesn’t reflect widespread optimism.

“They’re still really nervous,” said Michael Yoshikami, whose firm Destination Wealth Management manages some $2.5 billion in assets for clients from its base in Walnut Creek, Calif. “There’s not a lot of conviction that this rally is the start of things being back to normal.”

The economic outlook is bleak: The United States appears to be teetering on the brink of the steepest downturn since the Great Depression. Goldman Sachs economists, for example, expect the gross domestic product to contract at an astounding 34 percent annual rate in the second quarter, with unemployment reaching roughly 15 percent.

That makes the market’s recent bounce all the more remarkable.

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