The S&P 500 increased by 2.1 percent over the last two days as investors responded positively to a tentative ceasefire between Israel and Iran. With the stock market’s climb towards record levels, investors are contemplating whether stocks can rise further or if there are obstacles still ahead.

As the market rebounds, there’s increasing momentum in US tech and artificial intelligence sectors. On Tuesday, the Nasdaq 100, which includes the largest tech companies in the US, reached an all-time high, marking its first new record high since February.

Tech and AI stocks are beginning to return to their “leadership” in US markets, helping push the major indexes higher, said Ross Mayfield, an investment strategist at Baird.

“Does it become a bubble at some point? I think it’s possible, but I don’t think we’re there yet,” Mayfield said. 

“And in the meantime, getting leadership from these big tech names is huge for a US market that’s hyper-concentrated in that area.”

Keith Buchanan, senior portfolio manager at Globalt Investments, said the market has climbed to a level that might not be justified given the economic backdrop.

The market is “looking through” some of the “present and clear” risks associated with tariffs and how they might impact the economy, Buchanan said.

“It can do that at times in an irrational way,” he said. 

“There are concerns about what the future holds from a profitability standpoint.”

Where do we go from here?

While Wall Street has shrugged off the Israel-Iran conflict and awaited developments on the trade front, investors are also trying to gauge where tariff rates ultimately settle and what other factors might impact markets.

The current average tariff rate would still result in the highest tariffs in 90 years, noted Torsten Slok, chief economist at Apollo, in a Monday note to investors. That would lead to slower economic growth, higher inflation and higher interest rates for longer, according to Slok — all major obstacles to the S&P 500 climbing higher.

Geopolitics and second quarter earnings releases beginning in mid-July are other catalysts that could impact investor sentiment and the market, said Eric Freedman, CIO at US Bank Asset Management, said in a Monday note.

“How companies are absorbing or passing on tariff price increases represents a key item of investor interest in upcoming quarterly releases, with investors gauging the future impact on inflation, interest rates and economic growth,” Freedman said.

Kumar at Jefferies said in a Wednesday note that he is looking for how US jobs data holds up this summer and whether Treasury yields rise due to concerns about the deficit, which could pull investors away from stocks.

“The main message for investors is to stay invested and avoid reacting sharply to any news or market reaction that may have a short-term negative impact upon equity prices,” SWBC’s Brigati said.

“It is nearly impossible to attempt to time the market, therefore maintaining a disciplined and long-term investing approach serves investors well.”