Even as the stock market plummeted, investors' overall portfolios were supported by a sharp rebound in bonds.

If recent headlines are making you worried about the market, consider some economic factors that are sometimes overlooked; they should make you feel relieved. However, before you sit back and relax, keep an eye out for one factor that may limit further increases in the stock market.

This month has been an uncertain month for investors. After the S&P 500 hit a record high in mid-July, weak employment and manufacturing data fueled the worst start to August in 20 years. Although the stock market has rebounded in the past few days, the market had mixed ups and downs on Wednesday due to lower than expected inflation data.

GavekalResearch believes that concerned investors may not have paid enough attention to some recent positive news.

Although no one likes to see stock prices plummet, the sharp rebound in bonds boosted investors' overall investment portfolios. The 10-year Treasury yield fell from 4.23% to 3.81% over the past month. As a result, although the stock market has declined 3% over the past month, investors in 60/40 stock/bond funds like VanguardBalancedIndexFund (VanguardBalancedIndexFund) have only declined 1%. (The trend in bond prices is the opposite of the trend in yield).

GavekalResearch co-founder Louis-Vincent Gave (Louis-Vincent Gave) wrote in a report on Wednesday: “Bonds have finally fulfilled their mission. Bonds have fallen victim to low interest rates.

Energy is another highlight. Despite the ongoing conflict between the Middle East and Ukraine and the number of US tourists at a new high, the price of crude oil (around $75 per gallon) is still lower than a year ago. Of course, Gavekal warned that if either of these two clashes intensified, things could change.

However, during this period, affordable fuel should help the economy continue to move forward, while also making it easier for the Federal Reserve to cut interest rates in September, which is what most investors expect.

The relatively weak but stable dollar is also something investors can cheer for. Weak US employment data recently helped the dollar index hit its lowest level since January, although the benchmark index's fluctuation range this year — from slightly above 106 to slightly below 102 — is far narrower than in the past decade.

“A weaker dollar should accelerate growth in emerging market economies,” Geff explained in the report. Many emerging markets use dollars to borrow and pay for raw materials, including oil. A weak dollar means lower interest costs and lower commodity prices.

However, investment research firm Prometheus believes that although worried investors have many reasons to reduce pressure, this does not necessarily mean that the US stock market will soar. This is because investors have spent more than half a year raising stock prices.

Looking at investors' overall allocation of stocks, this indicator measures the total value of household and business stock holdings compared to other assets (including real estate, bonds, and cash).

Although there are various calculation methods, Prometheus' proprietary method recently reached an all-time high of more than 50%. Founder AahanMenon (AahanMenon) said in an interview on Wednesday, “Even when the economy is strong, this can be a drag on the stock market. As numbers rise, so does the potential for return.”

Although this is not surprising to investors who are concerned about the market's price-earnings ratio, it also indicates that although the stock market will not necessarily collapse, it may be constrained in some way. At least compared to recent history, future upward potential will be suppressed.