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The S&P 500 may be trading near records, but investors aren't feeling totally at ease.
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A sense of complacency in markets may be magnifying risks, a strategist said.
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A crisis in China's economy and Big Tech valuations "running on fumes" are also threats to the market.
Even with the S&P 500 trading near record highs, there's always something for investors to worry about.
On Wall Street, it's called the "wall of worry," and investors must continually climb it.
"Unfortunately, sometimes Mr. Market can lose his footing on the way up," Steve Sosnick, chief strategist at Interactive Brokers, told Business Insider.
Some of the bricks the make up the wall of worry right now include the potential for a trade war following the Trump administration's tariffs, an ever-growing government spending deficit, and uncertainty around the longevity of the AI tech trade.
"If we get into a widespread and prolonged trade war, or some unexpected shock to the system were to occur, then the market could be at risk of a very large drop" of 20% or more, Chris Zaccarelli, chief investment officer at Northlight Asset Management, told BI.
Then there's the fact that everyone on Wall Street seems conditioned to buy the dip.
"One of my concerns is that the longer we go without a correction, the more invulnerable investors feel, and the more emboldened that traders become about buying every dip," Sosnick said.
"Every so often, there is a dip that is not a buying opportunity, but instead the early stages of something more significant. That's when the problems arise," he added.
As for what might trigger "something more significant," a sudden spike in bond yields is a likely candidate.
While the 10-year US Treasury yield has softened this year and dipped back below 4.50%, a swift rise toward 5% could trigger a stock sell-off.
Budget concerns could send yields soaring if the Trump administration follows through with more tax cuts that aren't balanced out by cuts to spending. A trade war, meanwhile, could also put upside pressure on bond yields.
"Bear in mind that foreigners buy huge quantities of US government debt. If trade or political tensions become dire enough for them to reduce their purchases, that could push yields higher by themselves," Sosnick said.
An "unexpected recession" driven entirely by outside forces could also be on the table.
"Many US investors aren't paying attention to the real estate crisis in China, but just like our real estate crisis triggered the global financial crisis, it is quite possible that a debt implosion in China could cause problems outside its borders," Sosnick said.