As the S&P 500 continues to climb, concern is growing across...

As the S&P 500 continues to climb, concern is growing across Wall Street that the narrow leadership of the rally is not sustainable for much longer. The question of when the Federal Reserve will start cutting rates is also weighing upon investors. Speaking at a central bank forum on Tuesday, Fed Chair Jerome Powell said that while the central bank has made some progress in reducing inflation, it is not quite ready to lower rates.

Scott Chronert, Citi Research head of U.S. equity strategy, thinks a pullback may be imminent in the coming months.

“Our concern is that the market is beginning to price in a growth expectation that may be difficult for companies, one by one, to meet, particularly given the ongoing strain that we’re seeing on underlying economic conditions,” he said on CNBC’s “Closing Bell” on Tuesday.

“Combine that with strong flows into the mega cap growth tech and core arena and a euphoric sentiment read — all suggest to us that we do have to be prepared for a pullback at some point as the summer unfolds,” Chronert added.

Several new economic data points are scheduled for release on Wednesday ahead of the Fourth of July holiday. ADP’s private payrolls data for June is due, as are weekly jobless claims figures. The U.S. trade deficit balance for May, while the S&P Global U.S. Services Purchasing Managers Index and the ISM Non-Manufacturing PMI readings for June are due.

Minutes from the policy-setting Federal Open Market Committee’s June meeting will be released in the afternoon.

The New York Stock Exchange closes early at 1 p.m. ET on Wednesday and will be shut on Thursday for Independence Day.