‘Big Money’ Turns Bullish—Will the S&P 500 Melt Up?

​Institutional investors are finally embracing the U.S. stock rally, fueling speculation that the S&P 500 could be headed for a sharp “melt up” in the weeks ahead.

According to DataTrek Research, State Street’s Institutional Investor Risk Appetite Index shows that "Big Money" has only recently joined the rally, after months of cautious de-risking. That surge in risk appetite suggests further upside is possible as the quarter draws to a close.

“Institutional investors were reducing risk from March through mid-May,” said DataTrek co-founder Nicholas Colas, calling it their longest de-risking stretch since late 2023. Now, however, risk appetites are approaching levels that often precede a near-term market top—meaning a melt up could accelerate before stalling out later this month.

The S&P 500 closed just above 6,000 on Friday, its highest level since February and only 2.3% below its record high. But Colas warned that current valuations—22.7x 2025 earnings estimates—require investors to believe multiples will rise even further for gains to continue.

The shift comes after a strong May rebound that pushed the S&P 500 back into positive territory for the year, despite lingering concerns over trade policy and tariffs. With many institutional investors having lagged behind the two-month global equity rally, they entered June in catch-up mode.

Historically, peaks in risk appetite have coincided with short-term market tops. Colas cited similar patterns in July 2023, July 2024, and early 2025, raising the possibility that the current move may also end with a sharp reversal.

Bottom line: “Big Money” is back in the game—and chasing stocks higher. But with valuations stretched and risk appetite running hot, the rally could quickly turn frothy. A melt up may be in the cards—but investors should be ready for a fast cooldown.







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