Goldman Sachs strategists warn: U.S. stock pricing is at a "perfect level" and is likely to experience a pullback
Goldman Sachs Chief Global Equity Strategist Peter Oppenheimer warned that the current "perfect" valuation of U.S. stocks may be difficult to sustain, and the market is prone to a correction. He pointed out that rising bond yields, overvaluation, and interest rate uncertainty are the main risk factors. Although the stock market is expected to continue rising for the year, high valuations and market concentration have increased portfolio risks, especially in the context of poor economic data and earnings performance
According to the Zhitong Finance APP, Peter Oppenheimer, Chief Global Equity Strategist at Goldman Sachs, warned that the current "perfect" market environment for making money may be difficult to sustain as investors digest the rising bond yields, overvaluations, and uncertainties surrounding further interest rate cuts.
Peter Oppenheimer stated, "The recent strong rebound in the U.S. stock market has brought valuations to a near-perfect level. While we expect the stock market to continue to rise overall throughout the year—primarily driven by corporate earnings—the market is increasingly vulnerable to pullbacks, especially if bond yields rise further or economic data and earnings performance disappoint."
Peter Oppenheimer noted that three factors complicate the outlook for the U.S. stock market in 2025: the rapid rise in the stock market may have already priced in optimistic expectations for economic growth in 2025; high valuations limit the forward returns of stocks; and the unusually high concentration in the market increases portfolio risk.
Peter Oppenheimer remarked, "A simple comparison of the most cyclical sectors with the most defensive sectors shows that the strength of the stock market in recent months largely reflects higher growth expectations, particularly in the U.S., where optimism about the Trump administration's deregulation and tax cuts has also played a role." "This makes the stock market susceptible to any disappointing growth, especially depending on the specific policy measures regarding taxes and tariffs from the incoming Trump administration."