Goldman Sachs: The likelihood of a bear market after the U.S. elections is low, and economic recovery will continue to support U.S. stocks

According to the Zhitong Finance APP, strategists at Goldman Sachs have stated that it is unlikely for the U.S. stock market to enter a bear market in the next 12 months, as economic recovery will continue to support the stock market. A research team led by Andrea Ferrario believes that even considering the risks posed by the presidential election on Tuesday, the likelihood of the stock market declining more than 20% and entering a bear market is only 18%.

The S&P 500 has risen about 20% this year, following a nearly 25% surge in 2023, led by soaring large-cap technology stocks. Evidence of the U.S. economic recovery has supported this rally, although bond yields have risen this month due to concerns about the depth and breadth of the Federal Reserve's easing cycle, compounded by uncertainties surrounding the U.S. election.

Goldman Sachs strategists wrote in a report, "As long as driven by stronger economic growth, the stock market should be able to digest higher bond yields." However, they warned that there could be significant volatility in the stock market following the U.S. election.

Strategists noted that despite recent signs of weakness, the economic environment remains friendly. Recent data shows that employment growth in October slowed to its lowest level since 2020, impacted by severe hurricanes and major strikes, while the path to cooling inflation remains bumpy.

Nevertheless, the U.S. economy expanded at a strong pace in the third quarter, continuing several quarters of robust growth, with the unemployment rate remaining low