The S&P 500 hit a record Monday, but a high water mark never comes without a downside. 

The S&P 500 was up 0.65% to 3,042 Monday. All three major U.S. indices rose on the day. 

Three main factors drove the up move:

First off, optimism about President Donald Trump's phase one of a U.S.-China trade deal continued to be a theme. Phase one would include an indefinite hold on tariffs on Chinese goods scheduled to go into effect in December, as well as potentially rolled back tariffs on Chinese goods in 2020. 

Second is the probability for a third 2019 interest rate cut stands at above 90%, according to data from CME Group. 

Lastly, of the 40% of U.S. companies that have reported earnings for the third quarter, 80% have beaten expectations, according to FactSet. Expectations were low for the quarter, but many stocks were still priced for earnings expectations that now have been beaten. 

But several data points are negative. 

Guidance Hasn't Been Great

Some 26 S&P 500 companies have issued negative EPS guidance for the fourth quarter, while 12 have issued positive guidance, according to FactSet. 

That ratio is below average for this time of year. After consecutive quarters of earnings declines, including in the third quarter, analysts are expecting Q4 EPS growth of 0.7% for the S&P 500. 

Earnings results matter, but in markets guidance can sometimes matter more. For now, stock investors are feeling positive. 

2020 Rate Cuts?

While the market is expecting another rate cut in 2019, many have said it's the Federal Reserve's guidance for 2020 that will move markets the most. 

Investors for weeks now have been expecting a reasonable chance of another rate cut, and that chance has only gotten more stronger in the past few days.

Economic data has continued to decelerate. That includes even consumer spend, the strength of which some analysts are starting to question. Institutional Investment Strategist Chris Macke recently told TheStreet consumers are financially sound at present, but their confidence will depend on employment and trade headlines

Even if several rate cuts in 2020 seem to be in the cards, lower rates may not stimulate growth much from here. Rate cuts have taken a back seat to stock prices. Other factors will outweigh interest rates, which are already incredibly low.

"I don't think we're at the point now where one additional insurance cut can be enough to spark inflation," Mark Heppenstall, chief investment officer at Penn Mutual Asset Management, told TheStreet. 

Looking Forward

Adding to investors' concern, the average S&P 500 stock trades at 17 times next year's earnings. Many on Wall Street say this leaves the market fairly to slightly overvalued. 

But if all the tariffs that could be taken off the table were indeed wiped out, U.S. companies would benefit hugely. The trade war has been the biggest factor weighing on earnings, and it now outweighs the interest rate picture. 

Currently, analysts are looking for 2020 earnings to grow 5.3%, a rate that could be stable as the trade picture becomes more certain and less debilitating to demand for goods and services.

Even if a deescalated trade war means fewer 2020 rate cuts, earnings growth projections would likely improve.