good vibes in markets Goldman Sachs warns that this holiday season may be coming to an end.
“The bear market is not over, in our view,” Goldman Sachs’ strategist closely followed Peter Oppenheimer wrote in a new note. “Conditions that typically correspond to stock bottoms have not yet been reached. We expect lower valuations (consistent with recession outcomes), a decline in deteriorating growth momentum, and a peak in interest rates before a sustained recovery begins.”
Oppenheimer Last warning in early September That stocks were not out of the woods. After Oppenheimer’s Call, S&P 500 (^ The Salafist Group for Preaching and CombatIt touched a new low for the year in mid-October on the back of higher interest rates and higher inflation readings.
“The recent recovery in equities is not the first we have seen in this bear market,” the note said. “In our view, the speed of rising interest rates (rather than their absolute level) has the potential to cause further damage as investors are likely to focus increasingly on growth and weak earnings.”
Many investors try hard to put thoughts of bear markets in the rearview mirror.
Amid signs of declining inflation and a renewed decline in the US dollar, stocks have rallied since the aforementioned October lows. In the past month alone, the Dow Jones Industrial Average (^ DJI) rose 10.6% and the S&P 500 gained 6.6%.
But Oppenheimer warns that hope is likely to fade, and soon.
“We continue to believe that the near-term path of equity markets is likely to be volatile and downward before reaching a final low in 2023,” Oppenheimer added. “So while near-term risks are the downside in global equities, they will likely enter a ‘hope’ phase in 2023; we expect total returns between now and the end of next year to be relatively low.”