By Teresa Rivas

The stock market's rally off its low is running out of steam -- and it may be time to take profits in some winners.

Stocks are falling to end the week as worries about war in the Middle East mount. Even so, this month has been a strong for the market, following on May's momentum, and the S&P 500 is still hovering around the 6,000 mark.

However, the pace of the market's rebound has understandably left investors nervous, even putting aside geopolitical concerns. The White House now says that trade negotiations with China are over, even though the latest agreement from London "did little other than to reset the trade relationship back to where it was following the Geneva talks and, importantly, didn't result in any further tariff reduction," notes Sevens Report President Tom Essaye.

That means consumers will face at least 30% tariffs on Chinese imports and additional 25% on select goods and "according to the administration, they are going to stay there in perpetuity," he notes. "Yes, ultimately Chinese tariffs were lower compared to the 145% absurdity in early April. But, they are much, much higher than at the start of the year."

Nor can investors count on the Federal Reserve helping near term, warns TD Securities Head of U.S. Rates Strategy Gennadiy Goldberg. "We expect the Fed to remain non-committal on future cuts," keeping investor expectations around two cuts for the year," he writes. "A weaker than expected CPI print is supportive for the Fed to continue to ease, but they are likely to remain on pause as they wait for tariff impacts."

All of that is to say, some investors might be braced for a pause, and BTIG Chief Market Technician Jonathan Krinsky agrees.

In a note Thursday, he noted that some momentum stocks looked likely to have limited upside in the near term.

"While it's still too early to say we are getting a more widespread pullback, we are starting to see some early cracks in certain high-beta momentum names today, with many leadership stocks working on potential downside reversals," he writes. "To be clear, most of these are in strong primary uptrends, so pullbacks are ultimately buyable. Tactically, however, we would be cautious of many of these names over the next couple of weeks, especially heading into quarter-end when big rebalances often take place.

He highlights General Electric, Robinhood Markets, Lemonade, Netflix, Tesla, Twilio, and Upstart Holdings as momentum names that could be vulnerable to a pullback.

Netflix might be a prime example. Barron's has argued that the stock looks attractive, given its industry dominance and minimal tariff risk. Yet not everyone agrees: J.P. Morgan downgraded the stock last month and it reiterated that call earlier week, noting the concern is "not because there was a change to our view on NFLX's leadership position in streaming or potential to become global TV over time -- but because more near-term, following significant stock price appreciation & outperformance."

That's not to say those stocks will be down for the count, but if there is a summer slump, even highflying stocks could feel the heat.

Write to Teresa Rivas at teresa.rivas@barrons.com

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June 13, 2025 14:27 ET (18:27 GMT)

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