"The rally that we've seen, I think, is vulnerable to reversing again," says Peter Oppenheimer, chief global equity strategist at Goldman Sachs, as he expects more downside in earnings estimates.

New York

Donald Trump has signed an order to impose tariffs imports into the U.S. from countries including China, Mexico and Canada.

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Goldman Sachs' chief global equity strategist, Peter Oppenheimer, has expressed concerns about the vulnerability of recent market rallies to reverse. Oppenheimer points out that the current market environment is characterized by uncertainty, largely stemming from tariff announcements which have disrupted an otherwise advancing economy. According to Oppenheimer, this has resulted in further downside risk to equities within a bear market backdrop that he describes as event-driven.

Oppenheimer notes that the level of uncertainty is affecting investment decisions both at the corporate level and among investors, contributing to downward momentum. He suggests that while the overall market is down about 12 percent from its highs, a typical characteristic of a bear market includes substantial rallies. These rallies, he says, are driven by investors reacting to incremental news with the fear of missing out on a trough.

Although recent rallies have been observed, Oppenheimer cautions they may be susceptible to reversal. He points out that equities are still trading at relatively high valuations, with the U.S. market trading at about 20 times earnings—higher than the historical average. While he doesn't see significant upside in valuations, Oppenheimer expects further downside in earnings estimates, which are already declining at a rapid pace. His analysis suggests that the market may be prone to further corrections in the near term as the equity cycle progresses.



Goldman Sachs: Markets vulnerable to further correction

How difficult is it to make investment decisions to be bullish on overall equities in this type of environment. Well done is a very good question. It's a real roller coaster ride. And the point that you make is a very good one. There's still a high degree of uncertainty about where we land in relation to tariffs and therefore the economy. And from that perspective I think there's further downside risk to equities in the context of this bear market. This is a bear market that we characterize as event driven. So it was triggered really by a set of tariff announcements that sort of derailed an economy that was moving ahead relatively well. It's possible of course that these tariffs are reversed or pulled back more and that we'll get a healthier recovery from this downturn. But I think a lot of investment decisions both at the corporate level and from investors themselves are just being held at bay at the moment as people wait to see. And that's going to create still further downward momentum because it's interesting to talk about this being a bear market Peter when we are only down 12 percent from the highs that on its surface you could say this is just a correction. Is there then a mismatch between sentiment and how poorly equity markets are actually doing. Yeah. What sentiment is very poor. And this is true in the corporate sector and amongst investors because the degree of uncertainty is so high. Bear in mind that equities take the U.S. was was at one point down 20 percent or so. That's a normal characteristic of a bear market. We've seen a good rally but we should also recognize that in most bear markets you do get strong rallies as investors iterate every little marginal piece of news in the fear of missing a trough. But the rally that we've seen I think is vulnerable to reversing again. Bearing in mind that equities are not that cheap. The U.S. market is still trading at around 20 times earnings. That's an around the 80th percentile. We don't think there's a lot of downside in valuation but I think we do see more downside in earnings estimates that already decelerating quite rapidly. Our numbers are below consensus. And I think as those earnings numbers continue to come down we're vulnerable still to a further correction in the near term in this in this equity cycle.

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Kyiv

Ukraine Invasion

Russia hits Kyiv with largest drone attack after Trump-Putin call

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Washington

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Jerusalem

More than 80 people killed in Gaza in one day

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Gilimanuk

Indonesia suspends search for 30 missing after ferry sinks near Bali

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Tecoluca

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Manhattan

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Madrid

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Tehran

Iran Strikes

Iran nuclear program degraded by up to two years: Pentagon

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Lhasa

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Boise

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Madison

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