After falling more than 10% in less than a month, the S&P 500 (^GSPC) has risen for two straight sessions. But many on Wall Street don't think the recent 3% bump in the index is a sign that the market has clearly bottomed for the year.

"We see the selloff in US equities as having further to go," Deutsche Bank chief strategist Bankhim Chadha, who predicts the S&P 500 will eventually rally 24% from current levels, wrote in a note to clients on Sunday.

Morgan Stanley chief investment officer Mike Wilson told clients, also on Sunday, that "a tradable rally" is possible in markets. But Wilson doesn't see a sustainable rally to new record highs "until the numerous growth headwinds are reversed" or the Fed resumes interest rate cuts.

The market's main issues as stocks declined? Growing uncertainty around President Trump's policies, how those might impact a weakening economic growth outlook — and fears over the artificial intelligence boom disappointing. In the past week, there's been little evidence that those fears were overblown.

In other words, other than some stocks being "cheaper" than they were a month ago, when the S&P 500 hit its most recent high, there haven't been a lot of compelling cases to convince investors — who didn't buy stocks last week — to pile in now. 

Plenty of survey data has cited concerns about how tariffs could impact both consumer and business spending. But there haven't been enough hard data points, like significantly softening consumer spending numbers, weak labor reports, or a swath of earnings guidance cuts, to complete the story.

Read more: What Trump's tariffs mean for the economy and your wallet 

"The vibes have helped us understand why the stock market has been getting hit so hard, and why concerns about the direction of the economy are rising," RBC Capital Markets head of US equity strategy Lori Calvasina wrote. "But the vibes aren't sending us a clear signal about whether, even with the S&P 500 down 10% from all time highs, a contrarian buying opportunity is at hand."

To be clear, even with strategists cutting their end-year targets for the S&P 500, many still see a rebound for the benchmark index sometime this year. For now, they just haven't seen the catalyst that will drive the charge higher. 

From a company-specific level, the looming question around tariffs remains how much they'd truly weigh on corporate profits. Small hints have sprinkled out thus far. For example: Delta Air Lines (DAL) warning profits will rise less than initially thought due to softening domestic demand amid "macro uncertainty." But a full look at how corporations are feeling about the current environment is nearly a month away, with first quarter earnings reports kicking off in earnest on April 11. 

Wednesday's Federal Reserve meeting could also be a market catalyst as investors search for more clues over whether the central bank will cut interest rates this year.

Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments

On a more technical level, strategists point out many signs the stock market rally was stretched entering 2025 have scaled back to normal levels — not levels that indicate it's time to buy the dip. 

Deutsche Bank's Chadha points out that investor allocation to stocks has declined materially over the past month but hasn't hit the bottoming-out level seen during President Trump's recent trade war. If investor allocation to stocks drops that far this time around, Chadha estimates the S&P 500 would fall about 7% more to 5,250. 

But with an April 2 deadline on Trump's next wave of tariffs, Chadha hopes for the removal of the political uncertainty that's been weighing on markets. 

Chadha wrote that if the souring mood about the president's tariff plans prompts a "credible plan to resolve tariff uncertainty, it will allow the business cycle to continue." If so, Chadha believes the S&P 500 could hit 7,000 this year.

BRENDAN SMIALOWSKI via Getty Images

On the flip side, if tariffs aren't scaled back and the recent fears about the slowing of the US economy intensify, strategists argue the stock market has more unwinding to do. For instance, the S&P 500's forward 12-month price-to-earnings ratio, a valuation metric investors use to discuss how "expensive" the index is at any given time, has only fallen to its five-year average amid the sell-off.

After hitting a price-to-earnings ratio rarely seen over the past 30 years entering 2025, the S&P 500's forward price-to-earnings ratio is at 19.9, about in line with the five-year average of 19.8 but below the 10-year average of 18.3, per FactSet data. 

"Equity valuations still do not reflect much genuine concern about either economic policy or possibly weakening fundamentals," DataTrek co-founder Nicholas Colas wrote in a note to clients. "We'd love to tell you that last Monday was the low, but the data says otherwise. [But] we remain positive on US large caps and look forward to a truly investable low in the coming weeks." 

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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