The S&P 500 hit another record high this week, something that’s become so common, it’s more likely to evoke a shoulder shrug than a smile.

Monday was the 46th time in 198 trading days this year the S&P closed at a new high. Only four times in the last 60 years have we seen more new highs in a single calendar year. U.S. equities are up more than 20% for the second consecutive year, and we still have more than two months to go.

Our fifth-grader would describe recent market conditions this way: “Stocks: All they do is win.”

The truth is U.S. equities have bucked several trends and overcome some scary headlines to climb higher in recent months. None of these have managed to pierce what has seemed like bulletproof armor, but investors should not ignore the potential risks to this rally.

Here are a few to keep in mind:

Election uncertainty
Politics should have minimal impact on your investment decisions, but given how close we are to the election, we can acknowledge a few variables with financial consequences. Kamala Harris wants to raise income taxes on corporations from 21% up to 28% and increase taxes on stock buybacks. Donald Trump has pledged to impose severe tariffs on foreign goods, especially those imported from China. Both candidates could implement policies that will directly impact corporate profitability in the years ahead, and the prospect of a contested election could also trigger market volatility.

High bar for corporate earnings
Experts expect third-quarter earnings for S&P 500 companies to grow roughly 4% from a year ago. That’s down from 11% year-over-year growth in the second quarter. Despite this slower growth, longer-term forecasts remain rosy. Consensus expectations call for roughly 15% year-over-year growth in Q4, 14% growth in Q1 2025 and 13% growth in Q2 2025. In terms of their market impact, earnings are always relative. Given the high bar, delivering double-digit earnings growth could still be a disappointment.

A Fed curveball
Now that the Federal Reserve has begun reducing interest rates, the market is assuming rate-cutting will continue for the foreseeable future. Consensus expectations suggest two additional 0.25% rate cuts are coming before year-end and another four cuts totaling 1% in 2025. But what if Fed policy evolves on a different schedule? A mini-surge in inflation data or a surprise jobs number could lead the Fed to pause rate cuts, upsetting investors and triggering a shift in market momentum.

Escalating wars in the Middle East
This is not the biggest threat to financial markets, but it might be the most visible. It’s been a year since Hamas attacked Israel, igniting the war in Gaza, which has intensified to now include Lebanon and Iran. Iran’s involvement is particularly concerning given it is a strategic ally of Russia. Further escalation could deepen U.S. involvement and worry investors.

Dual hurricanes in Florida
Everyone can see the physical devastation from the recent storms that destroyed parts of Florida. The financial fallout is less obvious. It’s too early to quantify insurance losses or rebuilding costs, but preliminary estimates have been astronomical. More than anything else, it’s the financial uncertainty that could impact the performance of certain market sectors.

So why is it these risks have (so far) mattered so little? The obvious answer is global stimulus has trumped them all. Not only did the Fed recently deliver the first interest rate cut in 4 ½ years, it cut rates more than expected. Less than two weeks later, China’s central bank cut interest rates and announced plans to inject massive liquidity into its financial system.

High government spending and falling interest rates are a pretty good recipe for stocks, but it’s also true much of the optimism might already be priced-in to asset values. It’s OK for investors to enjoy the ride while also preparing themselves for the inevitable bumps to come.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.