Right on cue, investors and strategists are lining up to heap doubt on a frenetic rally sweeping up assets from Singapore to New York.

As a gauge of global stocks moves toward a record, alarm bells are ringing over the speed and scale of a rally built on hopes that the economic damage from the coronavirus will be contained.

A steady stream of earnings beats and signs of an uptick in growth are on the side of markets seizing on any bit of good news. Yet behind every upbeat corporate result there’s another with a sober warning that the deadly outbreak will roil economic output and business activity.

Belying the surge in equities and credit appetite, copper and yield curves flash growth risks.

“Pretty much every client we talk to wants to buy the dip,” wrote Tobias Levkovich, Citigroup Inc.‘s chief U.S. equity strategist in a note. “And that is not comforting.”

The Stoxx Europe 600 Index climbed to a record in Thursday trading while contracts on the main American equity benchmarks all pointed to a fourth session of gains. A gauge of European credit risk hit its lowest since 2007.

Yet the battle against the virus could suffer a setback as factories reopen in China in the coming days and more people come into contact with each other. On the other hand, if factories fail to reopen, the economic impact could prove much more severe.

At Robeco, money manager Jeroen Blokland is eyeing the rally warily. The head of multi-asset funds at the Rotterdam-based firm recently cut an overweight allocation to stocks to neutral because of the spread of coronavirus. He says it’s not yet time to dive back in.

“Every investor is looking for the bottom and wants to find it a little bit earlier than his neighbor,” he said. “We need a little bit more confirmation that the outbreak will be contained before moving again.”

Earnings Risk

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