Two major Wall Street banks think it might be time to take money out of the stock market: Bank of America Merrill Lynch and Credit Suisse.
"With central banks heading toward removing liquidity, and both lofty valuations and narrow market breadth in the US, we think investors would be prudent to lock in some gains, rebalance
equities to under-owned sectors and hold above average cash," said Cheryl Rowan, portfolio strategist at Bank of America Merrill Lynch, said in a note Tuesday.
Stocks have posted stellar gains for the year already. In the time period, the S&P 500 has jumped 9 percent.
But the Federal Reserve is expected to raise rates at least once more this year, and it is prepared to shrink its $4.5 trillion bonds portfolio later in 2017.
The European Central Bank has also put out hawkish rhetoric recently. Last month, ECB president Mario Draghi said the European economy was "strengthening and broadening," adding "the threat of deflation is gone and reflationary forces are at play."
"We think the swing in global liquidity will weigh on the performance of stocks," Rowan said. She also said that a slowdown in earnings growth could be a drag for stocks this summer.