Sonali Basak, Chief Investment Strategist at iCapital, highlighted the S&P 500's upside potential, estimating a fair value range of 7,500 to 7,800 points. However, she emphasized the need for enhanced downside hedging due to limited scope for further valuation expansion and increased uncertainty in the latter half of the year. Basak pointed out that factors such as AI capital expenditures and large IPOs, which previously supported market gains, are weakening. She warned that a rise in the 10-year U.S. Treasury yield to 4.8% could significantly increase market volatility. Additionally, traditional "60/40" asset allocations have struggled to hedge risks, prompting investors to explore structured hedging strategies amid heightened "fat tail risk."