Rising bond yields, high valuations, and economic uncertainties could weigh on the market's resilience, he noted.
Overextended Valuations: The rapid rise in stock prices suggests that much of the anticipated economic growth for 2025 is already priced in. Recent sell-offs in high-growth stocks like Nvidia, Palantir, and AMD reflect growing investor concern about elevated valuations in a potentially higher interest rate environment. This overextension may limit forward returns, with Goldman projecting a total S&P 500 return of only 3% over the next decade, ranking in the seventh percentile of historical returns since 1930.
Competition from Other Assets: Goldman highlighted the increasing competition equities may face from alternative assets, including Bitcoin and other investments, as investors seek better returns in a changing economic landscape.
Adding to these concerns, Oppenheimer suggested that the strength of the recent rally could exacerbate market volatility in the coming months. Factors such as Trump policy risks, trade tariffs, and a 10-year Treasury yield potentially climbing to 5% are creating a complex backdrop for investors. He stopped short of predicting an imminent 10% correction but advised caution, recommending that investors consider reducing risk exposure in their portfolios.
This article was written by Eamonn Sheridan at www.forexlive.com. Read More Details
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