The stock market has rebounded back above its April 2 levels before the impact of President Donald Trump’s tariffs have fully hit the economy, and that could leave equities vulnerable if the data does start to sour. JPMorgan Strategist Mislav Matejka warned in a note to clients on Monday that the rebound since early April was boosted by some technical factors that no longer apply and that valuations are “stretched.” “Positioning is not cautious anymore, short covering was significant and the systematic rerisking took place, … future equity moves should be more driven by fundamental outcomes, rather than technicals,” Matejka wrote. His team is looking for economic growth to soften and a potential rise in consumer prices in the months ahead, as “payback for frontloading of orders” ahead of tariffs, could reignite fears of the dreaded “stagflation.” Add that all together and you have the environment for a weaker period for stocks. .SPX YTD mountain The S & P 500 is well above its April lows but has not made a new high since February. The tariff situation is far from settled. Trade tensions were stoked again on Monday when China pushed backed against the Trump administration’s claims that it had broken the preliminary agreement reached in Geneva. But even if the latest flare up blows over, the market rebound could be overlooking the fact that tariffs are still well above their pre-Trump levels, even after all the pauses and reductions. “It looks like the tariff rate is not going to be in the mid-20s, but what’s on paper today is still 12%, and that’s still a big jump in terms of what the ultimate hit to the economy is,” said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management. To be sure, Northwestern Mutual is not forecasting a recession. Stucky said the downside risk for the market is probably more of a “run-of-the-mill” correction unless the unemployment rate starts to climb. Another key data point to watch is consumer spending, which is still solid and helping to support the stock market, Stucky said. “That might change though. … We’ll see how consumers actually react to higher prices when they arrive later this month and into the summer,” he added.