For more than a year, the SPDR S&P 500 ETF Trust (NYSE: SPY) has been tearing its pandemic lows higher. Tom Essaye, founder of Sevens Report Research, said Friday the stock market rally was supported by four major pillars over the past year. Unfortunately, two of these pillars could break now and put the market at risk in the short term. Essaye listed the following four bullish catalysts as pillars of the stock market rally last year. 1. Government incentive. The U.S. government has already spent around $ 6 trillion on incentives to prop up the economy during the pandemic downturn. The latest $ 1.9 trillion stimulus package will likely be the last, and Essaye said that pillar is now cracked. “The bottom line is that the outlook for government spending is much more mixed because while there may be more spending (which is good for growth) it will come with tax hikes (which is bad for growth), and there is one of those mixed outlooks Moving away from last year (where everything was spent and no tax increases), ”said Essaye. Related Link: Could Long Term Selling Of Capital Gains Tackle The Market? 2. Federal Reserve Accommodation. The Fed cut its rate range on Fed funds to 0% to 0.25% and bought $ 120 billion in assets every month to maintain a healthy credit market. Essaye said that pillar is now cracked too, as a growing number of Fed officials said they see a rate hike in 2022 based on the Fed’s latest dot-plot projections. 3. Vaccination Optimism. Essaye said vaccination optimism has been a bullish catalyst throughout the rally, from positive critical study data to FDA approvals to a U.S. vaccine launch now ahead of schedule. Unfortunately, Essaye said that financial markets have already priced in an end to the pandemic for the next few months, so it’s unclear how much stock market upside the vaccine can do for the future. 4. No double-dip recession. It seems like a lifetime ago that investors were concerned about a possible double-dip recession in 2020 or 2021. However, employment and income have steadily moved in the right direction, and the chances of a double-dip recession seem extremely slim. Gasoline Gas Attitude: The economy is well positioned to aggressively rebound in 2021. It remains to be seen whether stock prices have more upside potential when support from government incentives and the Federal Reserve is scaled back. For more information on Benzinga, click here for Benzinga option trades. If you invested in Tesla stock a year ago, how much would you have now? Could selling long-term capital gains weigh on the market? © 2021 Benzinga.com. Benzinga does not offer investment advice. All rights reserved.