(Bloomberg) — Delta cases. Inflation. Fed tapering. China’s crackdown. These are among the reasons why investors could soon get more nervous about this stock market.

The S&P 500 hit another record on Friday after Jerome Powell’s dovish taper speech reassured investors. However, the mood seems more cautious compared with a few weeks ago, when companies were in the middle of a record-setting earnings season.

All the concerns boil down to one big debate: Has the recovery from the pandemic already peaked? That’s a question that will only be answered in the months ahead. For now, investors say they’re scouring through management commentary and economic data for any hint about what’s to come.

“I’m not completely bearish, but I do see risks on the horizon that need to be watched,” said Marcus Morris-Eyton, a portfolio manager at Allianz Global Investors.

Here’s a rundown of the key risks ahead:

Virus Variant

Even with the delta variant raging in many countries, the conventional wisdom among investors on the pandemic at this point is that vaccination will keep the coronavirus in check. The risk is that the hospitals again get overwhelmed, forcing another round of lockdowns globally that slam the economy and key sectors such as travel, which is already one of the worst-performing groups in Europe and the U.S. in the second half.

Fed Tapering

Of course, if the economy does keep chugging along, that raises the prospect that the Fed will accelerate its plans to pull back on economic stimulus in a bid to keep inflation in check. Stock prices have benefited from more than a decade of ultra-low borrowing costs that have pushed investors to invest in equities. Higher rates would especially hit the stocks with the highest valuations. “Any corresponding rise in bond yields from a potential decision to taper could lead to a derating of equities,” Tommy Faber, a fund manager at Waverton Investment Management.

Fed Chair Jerome Powell said Friday the central bank could begin reducing its monthly bond purchases this year, though it won’t be in a hurry to begin raising interest rates thereafter.

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For Fed Taper, Forget When It Starts. The End Matters More

High Bar

The second-quarter earnings season was one for the record books — 87% of companies in the S&P 500 reported better-than-expected results, a record number not matched in almost 30 years of historical data, according to Karolina Noculak, investment director at Aberdeen Standard Investments. With beats being so widespread, there’s a risk that expectations for coming quarters are too high. “Investors have now got quite accustomed to companies beating analysts’ projections,” she said.

Chips Needed

A semiconductor shortage is hitting everyone from technology giants to automakers. The boss of Germany’s biggest chip firm, Infineon Technologies AG, expects the episode to last until 2023. That means earnings growth for several industries is at risk for many quarters to come.

Cost Spike

The input shortage isn’t limited to chips. An undersupply of raw materials, shipping containers and labor is hitting a raft of industries, causing a surge in prices. Lysol maker Reckitt Benckiser Group Plc, Toshiba Corp., Tyson Foods Inc. and Henkel AG are among the big names that have been hit by concern that a rise in costs could hurt margins.

China Worries

China’s economic recovery is faltering as virus variants linger, and that’s already seeping through into management commentary. Strategists at Jefferies warn that decelerating Chinese growth is set to weigh on global profits, and potential negative surprises could be seen as early as the fourth quarter.

That’s on top of Beijing’s recent crackdown on industries like tech, education and property. Louise Dudley, global equities portfolio manager at the international business of Federated Hermes, said she’s happy retaining an underweight on China. “The regulation that we’ve seen so far has been quite concentrated within tech,” she said by phone. “Our expectation is that that will broaden.”

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