The market's rapid bounce back to near record highs over the past month has not been kind to investors betting against US stocks.

From the market bottom on April 8 through May 20, short sellers have lost more than $250 billion, according to data from S3 Partners. All of the "Magnificent Seven" stocks were among the top 20 names on which short investors lost the most money. Shorts on Nvidia (NVDA) and Tesla (TSLA) lost more than $19 billion combined during the period.

Both Nvidia and Tesla have benefited from individual catalysts throughout the run. For Nvidia, easing trade restrictions have been a boost for the AI chip leader headed into its next earnings release on May 28. Meanwhile, Tesla stock has rocketed higher as CEO Elon Musk returned focus to the company after a stint with the Department of Government Efficiency (DOGE).

The short squeeze hasn't just happened in large cap tech names. It's been a core theme of the most recent market rally. Short sellers were also hammered in popular retail trading names over the past several weeks. Losses in Palantir (PLTR) and Hims & Hers (HIMS) also totaled more than $2 billion while short sellers in the bitcoin-focused company Strategy (MSTR) lost more than $5 billion.

Palantir shares have risen more than 55% since the market bottom while Strategy shares have soared over 68%. Hims and Hers stock has more than doubled. All three stocks have far outpaced the 17% gain in the S&P 500 over that time period.

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The broad market rally began on April 9, when President Trump announced a 90-day delay on a wide swath of his reciprocal tariffs. This led the S&P 500 to its best day since 2008. But the rip roaring rally didn't stop there.

As Trump has pulled back further on other duties, stocks chug higher continued. As strategists have digested the large move higher in stocks that recently brought the S&P 500 back within 3% of its record close, some believe short-covering helped contribute to the rally as many market participants had turned bearish.

“I don't actually think it is so much a validation of strong fundamentals [within the stock market] as it is a reflection of the fact that the market was caught short at a time when there was no actual fundamental information available," BNP Paribas head of debt & equity strategy Viktor Hjort told Yahoo Finance.

With the broader market back at levels not seen since February, the next catalyst for stocks lies in economic data and whether it reflects resiliency despite tariffs that have gone into effect, Hjort says.

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“We are going into June with a much more balanced, perhaps slowly more vulnerable type of market setup, at a time where we're going to start getting real data," Hjort said.Tesla stock has surged as CEO Elon Musk returned focus to the company after a stint with the Department of Government Efficiency (DOGE). (Photo by Leigh Vogel/Getty Images for Economic Security Project)·Leigh Vogel via Getty Images

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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