Goldman Forecasts Decline

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Goldman Forecasts Decline

Goldman Sachs Forecasts 20% Decline In S&Amp;Amp;P 500

The market is cheerful & the S&P 500 index is also in the green. However, that will be short-lived according to a recent forecast by Goldman Sachs.

The analysts at Goldman Sachs believe that the leading US index is heading towards a 20% decline from its recent levels. At the center of this forecast is the fear of a US recession & a global move towards safety.

High Chance Of Recession In Usa

Goldman Sachs added that there's a 45% chance of a recession cycle in the USA. They believe that the reasons for this are deeply embedded in the economy. Although there's a pause in tariffs, it will be short-lived.

In fact, the tariffs today are much higher than what they were around 6-7 months ago. So, we can definitely expect a major decline in global trade. On top of that, things will get expensive in the USA, and there's no way around that.

That's the classic recipe for higher inflation which will eventually lead to recession in the USA. From tariffs to inflation to global headwinds, the EPS of the S&P 500 is highly likely to decline.

In addition, the Nvidia forward P/E ratio shows a divergence from the share price. If we look back, signs like these are always bad, and they lead to a decline in the share prices.

And if a stock like Nvidia drops hard, it will eventually translate into a bearish S&P 500 without any doubt. That's why it is best for investors to brace for impact and take action instead of just waiting around for things to happen.

Amidst all of this, a flight towards safety is also seen around the world. For example, the Gold market has outperformed the S&P 500 by almost 15% in the previous quarter.

With all of this going on at the same time, it makes sense for the Goldman Sachs to give out a bearish forecast for the S&P 500.

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