Stocks have made a remarkable recovery over the past few months, but the momentum hasn’t been enough to carry the market to a new high for the year. After an April plunge that took the Morningstar US Market Index to the brink of a bear market, stocks roared back more than 20%—the equivalent of a bull-market gain—before running out of steam in mid-May.
With investors awaiting the outcome of trade talks ahead of a July 9 tariff deadline imposed by US President Donald Trump, stocks have settled into a holding pattern. Analysts say the outlook for the market in the months ahead looks relatively balanced, with bullish signals like strong earnings, a healthy economic, and moderation on tariff policy helping to offset more bearish signals like elevated valuations, deficit risk, and signs of stress.
Here’s what investors need to know about the headwinds and tailwinds for the stock market right now, and what could tip the scales either way.
This post originally appeared at Morningstar.