Stocks roared back to life in May, but trouble still looms for Wall Street. The S & P 500 and Dow Jones Industrial Average are up 6.2% and 3.8%, respectively, in May. Both benchmarks are on pace to snap three-month declines. The Nasdaq Composite advanced nearly 10% this month, on track for its best month since November 2023. The U.S. pausing tariffs on China boosted stocks, easing concerns that protectionist trade policies could tip the economy into a recession. Technology investors in particular, which face a high tariff risk, breathed a collective sigh of relief. The sector is up 11.3% in May, led by gains in Nvidia and Super Micro Computer . .SPX mountain 2025-05-01 SPX in May But CLSA strategist Alexander Redman warns the market could soon be in for a rude awakening. “We fear the current market complacency may prove temporary, replaced by a realization that household and corporate spending plans and thus U.S. growth may disappoint,” Redman wrote in a note Thursday. Trade worries flared up once again this week. A U.S. federal trade court struck down Trump’s reciprocal levies Wednesday night, then an appeals court reinstated them a day later. Trump also said Friday in a Truth Social post that China ” violated ” its current trade agreement with the U.S., while Treasury Secretary Scott Bessent noted talks between the two countries were “a bit stalled.” “We ascribe a striking degree of complacency to the current S & P 500 price action which is seemingly discounting a rapid normalization across multiple sentiment indicators damaged as a consequence of Trump’s policy unorthodoxy,” Redman at CLSA added. “This extends beyond trade to unfunded tax cuts, some disruption to labor owing to the threat of deportation, and arbitrary cuts to government agencies, among other concerns.”