There may be a significant decline, strategists of the Wall Street giant told about the risks on the US stock markets. Experts of one of the largest US banks published their assessment of the situation on the stock markets.
Goldman Sachs strategists said that currently the conditions for the fall of the US stock market are not yet visible, as this asset class does not fully illustrate the recent growth of real yields and the chances of a recession.
Goldman Sachs experts evaluated the situation on the stock market
Strategists emphasized that with the current valuation of US stocks, it is not a question of a historically large premium to the real yield from the offer with bonds and cash.
There may be a significant decline if a real recession begins or geopolitical risks in Ukraine or elsewhere increase, – experts added.
None of the US assets monitored by Goldman is fully priced for a recession, while the lowest chances of a “severe hawkish scenario” are taken into account. Currently Goldman shares cost a little more than $ 335 per share. The market capitalization of the Wall Street giant is almost $114.6 billion, according to Yahoo! Finance.
Goldman’s position differs from the views of colleagues from Citigroup and JPMorgan, who said that the fall in the markets indicates that the recession is already priced into assets.
Bloomberg study of Wall Street analysts: pessimistic scenario
According to a Bloomberg study of mostly Wall Street analysts, the likelihood of a recession in the upcoming year has increased from 50% to 60%. Some Bloomberg economists are more pessimistic, estimating the likelihood of a recession in the coming 12 months at 100%.
At the time of writing, the S&P 500 Index is trading at 3,830.59. Since the beginning of trading, this index fell by 0.74%. At the same time, the Nasdaq Index, which includes shares of more than 3 thousand companies listed on the exchange of the same name, is currently at 10,970.99. It fell by 2.04% during trading, according to Yahoo! Finance.
With the S&P 500 down 19% so far this year, the US Federal Reserve’s monetary tightening to fight inflation has brought advanced economies closer to recessions. While this has been happening, 10-year Treasury yields have increased by more than 250 basis points.