3 reasons the stock market could be overheating this summer

• The stock market has pushed past a wall of worry to hit fresh records this summer.

• But some are concerned that the rally is showing signs of overheating.

• Sources say they believe high margin debt and a muted reaction to trade news signal the rally is at risk.

This summer has been a complicated time for financial markets.

Despite constant speculation of turbulence ahead, major indexes have demonstrated an unshakeable ability to push past the noise and reach record highs.

For investors, the summer stock market rally is a relief after months of tariff-fueled uncertainty. But it’s also raising one uncomfortable question: Is the market getting ahead of itself?

“One of the fastest sell-offs thanks to Liberation Day then one of the fastest rebounds,” stated Jay Woods, chief global strategist of Freedom Capital Markets. “That rally back wasn’t an overheated market, it was a recovery.”

In the months since the April sell-off and recovery, though, other market experts have raised concerns that stocks are showing signs of overheating. As Tom Bruni, editor-in-chief and VP of community at Stocktwits, said recently, the market has been flashing signs of tougher days ahead.

Here are three signals market pros are watching to know how much steam the current rally has left.

Tariffs have been a key input for investors all summer, but the reaction to positive updates has been relatively tepid compared to the volatile swings seen a few months ago.

The market moves in reaction to Trump’s deals with Japan and the European Union were tiny, but indexes eked out record highs after the news.

However, Dean Smith, chief strategist of FolioBeyond, warns that the market isn’t out of the woods when it comes to the trade war.

“The trade deals that are being announced are being viewed by many with some relief since ‘it could have been worse,'” he told Business Insider. “I contend it will get worse for the real economy, both because deals fall apart, or the agreed-upon tariffs actually start to have an adverse impact.”

Smith added that it can take longer for supply shocks to cause real economic damage than people expect, but others also say the tepid response is itself a sign that markets are feeling fatigued after the latest rally to all-time highs.

“News is not what’s important; it’s the market’s reaction to the news that tells the real story. And right now, investors are saying that the recent ‘good news’ isn’t good enough to keep prices moving higher after a record rally off the Liberation Day lows,” Bruni said.