Goldman Sachs’ portfolio strategy team has cut its outlook on the stock market for the next quarter.
In a note to clients published late Tuesday, Goldman’s team led by by Christian Mueller-Glissmann took its view on stocks to “Neutral” from “Overweight” for the next three months.
The team remains “Overweight” stocks over the next year and sees a 5% total return.
“We think equity drawdown risk in the coming months will depend on the interplay of the cycle and rates,” Goldman writes.
“With growth momentum nearing its peak and rates increasing further with a hawkish Fed, the asymmetry for equities is turning increasingly negative. This also means more vulnerability to potential shocks, e.g., from European politics, US policy, commodities and China.
Now, a decline in stocks wouldn’t, on its own, be a negative for the economy.
Certainly there is a large confidence element to the economy, and the U.S. right now is in the unique position of having an administration that is actively endorsing the idea that high stock prices reflect positively on the economy.
The long arc of market history has indicated that stocks usually go up, but also shows that most years see periods when stocks go down.
And right now, Goldman is bracing for one of those moments.
Yahoo Finance
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