“As that group of sectors and companies continues to widen, you could get a sudden stop in lending where liquidity problems are then solvency problems, and then companies have to start letting people go,” Mr. Christopher said.
In addition, stocks have risen so much in the past year that many of them might just be too expensive now.
Share prices aren’t based only on a general set of feelings in the marketplace. Investors look at what a company might earn in the future, how much debt it has taken on and how much extra cash it is likely to be able to distribute to its shareholders. While corporate earnings growth was strong after the 2017 tax cuts freed up mountains of cash, it may start to slow.
One strategist, King Lip of Baker Avenue Asset Management, said he planned to look abroad next year. Foreign companies’ stocks aren’t nearly as expensive and in many cases their performance is the same or better than their American counterparts, Mr. Lip said.
Back in the United States, he added, “I wouldn’t be surprised to see a lot more volatility.”
Much will depend on what happens with technology stocks. Because of their sheer size, companies such as Apple, Microsoft and Amazon have the biggest impact on Wall Street indexes like the S&P 500. In 2019 they became the stocks to own as investors sought a safe place to wait out the trade war and potential economic slowdown.
Apple is up about 84 percent this year, its best performance in a decade and a gain that has left it valued at $1.3 trillion. Amazon shares have risen 24 percent and Microsoft 57 percent.
By the close of trading on Friday, the S&P 500 was up 29.3 percent for the year. If it ends higher than 29.6 percent on Tuesday, this will be the best year for stocks since 1997, when the gain was 31 percent.
This year’s rally started at a point of weakness. In 2018, the S&P fell 6 percent. The declines, mostly late last year, weren’t enough to kill the decade-long bull market. Instead, along with the Fed’s signal that it would cut interest rates, rather than increase them as it had in 2018, they seemed to whet investors’ appetites.
American consumers never backed away this year, even when companies did. Consumer spending kept the economy afloat. If 2020 is to be another great year for stocks, it will almost certainly be because American spenders — rather than American companies — maintain their robust activity.