(Bloomberg) -- US stocks have defied skeptics this year as they climbed to records despite a global trade war, lingering fiscal fears and September’s gloomy reputation. But for investors fretting about the rally’s durability, the economy may be sending a warning that the momentum is about to fade.

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The S&P 500 Index has added $15 trillion in market value since early April and notched 27 records in 2025. Its 34% gain over the last five months — led by a surge in Big Tech shares — is a feat topped in just four other instances since 1950, according to data compiled by Bloomberg.

With the Federal Reserve back to cutting interest rates, risk appetite remains in high gear. The worry among some investors, however, is that the rebound has already priced in a range of positive developments, from easier monetary policy to the economy’s resilience in the face of tariffs. That could leave stocks floundering if the growth picture darkens.

“We’re not fighting the Fed anymore,” which is “good for stocks,” said Michael Sansoterra, chief investment officer and senior portfolio manager at Silvant Capital Management. “The risk is that if the economy significantly quivers, traders may panic and dump those pricier Big Tech stocks first on knee-jerk reactions.”

Middling Economy

While investors cheered the past week’s interest-rate cuts, it remains to be seen whether the Fed has eased monetary policy in time to buffer the economy from any potential negative effects of the global trade war. FedEx Corp., one of the latest companies to flag the impact of tariffs, said on Thursday it expects a $1 billion hit from trade volatility and the loss of a key exemption for low-value goods.

Meanwhile, economists expect real US gross domestic product data, which accounts for the inflation-adjusted value of goods and services, to show economic output decelerated to 1.5% on an annualized basis in the third quarter, down from the government’s official 3.3% reading in the second quarter.

To analysts at Bloomberg Intelligence, a key factor is whether the economy can escape a regime of middling growth that has coincided with comparatively weak stock gains. BI’s model shows that times when growth fears are swirling — last May, for example — have tended to be ideal for buying stocks, while the market has also performed well when the economy is strong.

Now, however, the economy is in a rare in-between zone that’s well off the expansion of 2021 yet short of a recessionary collapse, according to BI’s model, which measures factors such as consumer sentiment and the ISM Manufacturing PMI.

Since 1969, the S&P 500 has posted a median return of just 4% over the six months after BI’s indicator shows a reading of 0.5, as it did in August. That compares with a 13% median advance in the same span after the model falls into recession territory, and a nearly 6% gain when it signals a healthy economy, according to BI equity strategists Michael Casper and Gillian Wolff.

“The bar is high and the Fed needs to launch an economic acceleration with rate cuts, or else this year’s torrid pace of stock gains are likely to cool off soon,” Wolff said.

She also noted that the S&P 500’s forward price-to-earnings ratio, which stands at around 23, is roughly two standard deviations above its 15-year historic norm. That suggests it will be tough to squeeze out more premium with stocks at current valuations, Wolff said.

Of course, there’s no shortage of stock market bulls, and few investors are outright bearish. Sansoterra, who oversees the Virtus Silvant Focused Growth Fund, is buying a range of tech names, from Broadcom Inc. to Palantir Technologies Inc., in a bet that stocks will continue rising.

“A lot of economic pain was already priced into stocks in the spring, so the economy would need to suffer a significant slowdown to really rattle stocks and force investors to reduce their earnings expectations,” said Eli Horton, senior portfolio manager at TCW Group, who is also favoring technology and growth shares.

History shows that rallies similar to the one the market has seen this year are difficult to derail: Since 1950, the S&P 500 has advanced by roughly 5.5% on average in the final four months of the year when it has notched at least 20 records by late August, as it did this year, according to Sam Stovall, chief investment strategist at CFRA Research.

Those gains could come with a few bumps in the road, Stovall said. He sees an increased chance the S&P 500 could take a 5% hit as the calendar flips to October, which tends to be the most volatile month for stocks — though September is the weakest.

Still, “while another retreat in stocks may be looming, traders haven’t expended all of the market’s fuel yet,” he said.

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