CoinDesk reports:
U.S. banking giant Goldman Sachs has just issued a warning to investors. According to Investing.com, in a new report to clients, the company’s strategists indicate a series of fundamental factors suggesting an impending market correction.
Goldman Sachs points out that declining real income growth at the start of the second half, slowing GDP growth, and weakened consumer sentiment are unfavorable factors. Strategists suggest stocks may be overbought, noting that the S&P 500 index has recently outperformed other markets significantly.
They also highlight an increase in stock concentration as an additional negative factor, with the weight of the top ten companies in the index being the highest since 1929. The Goldman team suggests that the election cycle could also become a short-term negative catalyst.
“In the coming months, concerns over elections in the U.S. and Europe could dampen consumer and business confidence,” Goldman said.
The firm notes that the data does not indicate an imminent long-term bear market, pointing to slight economic expansion and the possibility of interest rate cuts as two positive factors. However, they caution that this “does provide a warning signal that a period of adjustment with higher volatility and lower returns is more likely now.”
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