Stock Market Insights: Stocks at record highs; what should investors do now?

Joe Shearrer, CPFA® is Vice President and Wealth Advisor at Fervent Wealth Management.

Since bottoming out in April, the U.S. stock market has staged a powerful rally—pushing the S&P 500, Nasdaq and Dow Jones Industrial Average to new all-time highs. As of mid-July, the S&P 500 has gained over 18% year-to-date, while the tech-heavy Nasdaq has climbed more than 25%, fueled by strength in AI-related stocks, a resilient economy and hopes for interest rate cuts later this year.

But with the market at historic highs, many investors are asking the same question: What now?

Should you buy more, take profits, or sit tight? While there’s no one-size-fits-all answer, there are some key principles that can help guide investors through this moment.

Don’t fear new highs. They’re normal.

It may sound surprising, but record highs are a normal feature of healthy markets. Over time, markets tend to rise in response to earnings growth, innovation and economic expansion. In fact, since 1950, the S&P 500 has hit a new all-time high in roughly 7% of all trading sessions. The mistake isn’t investing at record highs—the mistake is trying to time them. Those who stay invested tend to benefit most over the long run.

Check your risk—not your emotions

The market has come a long way in a short time. Since April’s dip (triggered by hot inflation data and rising bond yields), stocks have surged on cooling inflation, strong job numbers and renewed enthusiasm for AI. But when markets move fast, portfolio drift can sneak in. If your stock allocation is now significantly higher than your target, it might be time to rebalance. That doesn’t mean “sell everything”—it means realign your portfolio to match your risk tolerance and goals.

Use this time to strengthen your plan

Rather than reacting emotionally, take this as an opportunity to:

• Review your retirement income strategy

• Trim oversized or concentrated positions

• Evaluate tax-smart strategies (like Roth conversions or tax-gain harvesting)

• Revisit your cash holdings—too much sitting idle may be a drag on long-term performance

Watch the Fed, but don’t bet on it

The Federal Reserve remains a wildcard. While inflation has cooled, the Fed has been cautious in signaling rate cuts. Markets are currently pricing in a possible rate cut in September, but that could shift based on upcoming economic data.

Whether rates fall later this year or early next, investors should be prepared for volatility around Fed decisions, earnings reports and election headlines as November approaches.

Stay diversified and disciplined

Today’s rally has been dominated by a handful of mega-cap tech stocks, but broad diversification remains your best defense against uncertainty. While AI, semiconductors and cloud computing have led the charge, value stocks, small caps and international equities could benefit from a broader economic upswing.

The bottom line

Market highs aren’t a reason to panic, but they are a reason to pause and check your footing. Investing isn’t about chasing trends or calling tops. It’s about aligning your money with your goals, maintaining discipline and adjusting when needed. If you’re unsure whether your portfolio is positioned properly for the road ahead, now may be a good time to get a second opinion. Bull markets reward long-term thinking—and that starts with having a solid plan.

Have a blessed week!

Joe Shearrer

www.FerventWM.com

Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC.

Opinions voiced above are for general information only and not intended as specific advice or recommendations for any person. All performance cited is historical and is no guarantee of future results. All indices are unmanaged and may not be invested directly.

The economic forecast outlined in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Fervent Wealth Management is a financial management and services entity in Springfield, Missouri.