The US stock market is highly unlikely to plummet in the coming months, strategists at Goldman Sachs said. The experts cannot think of a reason for an abrupt reversal.
On December 10, the S&P 500, a popular stock market index tracking the performance of 500 large US companies, hit a new all-time high. The main US stock indices skyrocketed despite extreme inflation in the country, with prices now rising at the fastest clip in nearly 40 years.
The S&P 500 index swelled 0.95% to 4,712.02, the highest level on record, according to analysts.
At the same time, a small number of stocks contributed to the rally of the S&P 500, Goldman Sachs noted. Since April 2021, the main US stock index has surged 51% owing to five companies: Apple, Microsoft, Alphabet, NVIDIA, and Tesla. The stocks of these giants account for over 20% of the total market capitalization of the index.
A considerable difference between the bullish stock market after the COVID-19 pandemic and the current rally is of great concern to Goldman Sachs analysts. Presently, the number of participants in the stock market significantly decreased. Periods of sharply declining market breadth are followed by weak returns and deeper-than-average drawdowns, the bank emphasized.
Generally speaking, Goldman Sachs does not expect the US stock market to fall and says that investors should buy stocks with great potential for growth and high margins.
