Under the surface of the

U.S. stock market

’s march to record highs this month, there are signs the rally is running out of gas.

The

S&P 500 Index

has gone 17 sessions without a move of one per cent in either direction, the longest stretch of relative tranquility since December. For Matt Maley at Miller Tabak & Co., the diminished movement shows the market’s momentum is waning after its scorching rebound from April’s tariff-fuelled lows.

Amid a barrage of headlines about the

United States Federal Reserve

chair’s job security and

U.S. President Donald Trump

’s trade war over the past few weeks, investors appear to be tiring of waiting for more stocks to join the tech-led market surge, said Maley, the firm’s chief market strategist.

“Whenever a narrow rally losses steam, it usually signals that investors are starting to look for signs of a broader rally,” he said. “When they don’t get it, they tend to pull back for a while.”

It’s hard to blame them for retrenching at the moment, with earnings season just getting underway, trade negotiations in flux and expectations growing that the Fed is months away from potentially cutting interest rates.

As Aaron Nordvik at UBS Securities LLC sees it, the tailwinds that were driving shares higher are now easing, such as the stock market’s history of strength in July.

“I’ve been quite bullish for a while now, but most of the good news is now in the price,” said Nordvik, a macro equity strategist at the firm. While he says a sharp slump is unlikely, in his view the risk-reward profile for equities is less attractive than even just a couple weeks ago.

This week has the potential to stir up volatility. Two members of the so-called

Magnificent Seven

megacap tech stocks that powered the market higher in recent years are set to report results —

Tesla Inc.

and Google parent

Alphabet Inc.

The stakes will again be high for the cohort as Wall Street looks for an update on their spending plans, especially related to

artificial intelligence.

Then comes the Fed’s July 30 policy decision. The central bank is widely expected to keep rates on hold. But all eyes will be on Chair Jerome Powell to see whether he’ll respond to Trump’s relentless pressure on him to cut borrowing costs, or reports that the president was on the brink of seeking to fire him.

Momentum reading

For now, stocks are near an all-time high, sustained by a broad sense that the

U.S. economy

is holding up in the face of the president’s tariffs, while inflation remains muted.

The are other indications of cooling momentum. Dan Greenhaus at Solus Alternative Asset Management points out that the share of S&P 500 members above their 20- or 50-day moving averages has declined lately, an indication the rally may be losing energy.

“But given the better-than-expected inflation and economic data — not to mention corporate commentary which thus far has been pretty good — I’m not sure I’d put too much stock in the technicals right now,” said the firm’s chief market strategist.

There’s also an argument that the ebbing turbulence — the market’s so-called fear gauge isn’t far above its lows for this year — is a reason for stocks to extend their gains.

“An old saying on Wall Street is, “Never short a dull market,’” said Dave Lutz, equity sales trader and macro strategist at Jonestrading. “History shows quiet markets tend to drift upward.”

Still, for investors waiting for a fresh catalyst to lure them back in, earnings season has yet to prove decisive. Company results have been solid. But this time the reaction has been muted, a worrisome hint that much of the good news is priced in to a market that’s at historically high levels with elevated valuations.

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And while recent economic data supports the bullish case for stocks, Citigroup Inc. strategists say that much of that is also reflected in shares.

“The issue is the setup,” Scott Chronert, the firm’s head of U.S. equity strategy, wrote Friday in a note. “It feels like the market is moving ahead of positive developments.”

Bloomberg.com