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Stocks have a lot to live up to in the second half of the year. By mid-year 2024, major benchmarks had soared to impressive heights. The S&P 500 and Nasdaq Composite are hovering around all-time highs, having risen about 15% and 19%, respectively. The Dow Jones Industrial Average, which has less exposure to technology stocks, is up nearly 4% this year. Much of the gains in the broad market index and the tech-heavy Nasdaq can be attributed to Nvidia, which has now grown to the point where it has the power to move entire markets. Since the artificial intelligence chipmaker took off in January 2023, shares have skyrocketed nearly 800%. Just this month, the company made even more progress: Nvidia briefly surpassed Microsoft to become the most valuable public company. And, it is one of three large-cap companies that have crossed the $3 trillion threshold. Deutsche Bank Research points out that Nvidia reached this milestone in just 30 days, after quickly adding $1 trillion to its market capitalization. NVDA 1Y mountain Nvidia That excitement has many investors concerned that AI trading activity — and by extension the market — has exhausted itself, and they are considering how to position their portfolios in the the rest of the year. If last week’s bumpy moves are any indication, the road ahead promises to be very uncertain. “The stock market’s warning lights are starting to flash, but most investors can’t hear or see them because FOMO in the markets is rising and investors are just enjoying the ride,” Craig Johnson, market technician at Piper Sandler, wrote this week. “However, the longer these warning lights flash, the more painful the (market adjustment) repair bill will be.” On Friday, all three major benchmarks are set to record a winning week. The S&P 500 and Nasdaq Composite rose about 0.5% and 1%, respectively, while the 30-stock Dow rose 0.1%. Limited Profits from Here The stock appears to be at a critical juncture mid-year. In recent days, several Wall Street firms have raised their S&P 500 year-end targets to keep pace with this year’s surprisingly strong rally. For example, Goldman Sachs increased its year-end target to 5,600 from 5,200. Citi now predicts the broader index could end the year at 5,600, up from its previous forecast of 5,100. Elsewhere, Evercore ISI raised its target to 6,000, implying the stock could gain 9% over the next six months. However, few investors hope so. On an average basis, strategists expect the S&P 500 to end the year at 5,500, a CNBC Pro survey shows. That’s not even 1% higher than the broader index’s close on Thursday of 5,482.87. The benchmark index surpassed that milestone last week for the first time. Instead, many investors are concerned that stocks could perform poorly during the summer months — a historically weak market period. Some worry that the tech rally has gone on too long. Others are concerned that the second-quarter earnings season, which is expected to accelerate in a few weeks, may fall short of high expectations. “What you’ve done is start to set a very, very high bar for what companies need to deliver starting in the Q2 reporting period,” said Scott Chronert, U.S. equity strategist at Citi. , told CNBC’s “Squawk on the Street” this week. “So basically what all of this sets up in our view is that we have to be prepared for a pullback as we go through the summer months into the fall,” Chronert added. “And then, we think, set up for a better opportunity later in the year.” Elsewhere, Piper Sandler’s Johnson expects the S&P 500 to fall 10% this summer, saying investors are not paying attention to red flags including poor market breadth and Weakened motivation. In his sample portfolio, he is reducing his exposure to stocks from 90% to 80% and allocating the balance to cash. He is increasing his share in industrial sectors. However, others remain relatively optimistic about the stock’s path ahead. Bill Merz, head of capital markets research at US Bank Wealth Management, noted a “fairly benign” growth environment, falling inflation and the onset of interest rate cuts globally as reasons. to have a positive view on the stock’s prospects. “When you put all those factors together, we think it’s a favorable environment to lean toward risk, to do it in a modest way,” Merz said. He expects the rally could extend to large-cap stocks beyond large-cap companies. Jamie Meyers at Laffer Tengler said he remains bullish on technology, seeing those companies as “new defensive names.” However, he is avoiding stocks tied to the consumer, wary that there could be a pullback amid signs of weakness. “Consumers seem to be running out of money,” Meyers said. “Except, of course, the baby boomers who are still spending like crazy.” June jobs report Markets will be closed on Thursday due to the July 4 holiday. However, investors will get the next big insight into the labor market on Friday with the report June jobs. According to the FactSet consensus estimate, the U.S. economy is expected to add 190,000 jobs in June, down from 272,000 the previous month. The unemployment rate is expected to hold at 4%. The monthly jobs report is only increasingly meaningful as investors seek consumer insights, said Bank of America’s Merz. Although consumers have so far sustained the economy, they have now exhausted the pandemic stimulus and are starting to show signs of weakness. According to Merz, that means they increasingly rely on jobs and higher wages to cope with higher price pressures. “Right now, it depends on jobs and income for consumers,” he said. On Wednesday, investors will also receive the minutes of the Federal Open Market Committee’s latest meeting. Calendar for the week ahead All times Eastern Monday, July 1 9:45 a.m. S&P PMI Final Manufacturing (June) 10 a.m. Construction Spending (May) 10 a.m. ISM Index Manufacturing (June) Tuesday, July 2 10 a.m. JOLTS Jobs (May) Wednesday, July 3 8:15 a.m. ADP Jobs Survey (June) 8:30 a.m. Claims continuing unemployment benefits (June 22) 8:30 a.m. Initial Claims (June 29) 8:30 a.m. Trade Balance (May) 9:45 a.m. Final Composite PMI (May 6) 9:45 a.m. S&P PMI Final Services (June) 10 a.m. Durable Goods Orders (May) 10 a.m. Factory Orders (May) 10 a.m. ISM Services PMI (June) 2 p.m. FOMC Minutes Earnings: Constellation Brands Thursday, July 4 Independence Day Friday, July 5 8:30 a.m. June Jobs Report