Goldman Sachs' chief global equity strategist has recently indicated in an interview that stock market gains over the next 12 months are expected to be far more subdued compared to recent performance. The past year, along with the current year-to-date period, has delivered exceptional returns for the S&P 500 and other global indices, but that era of robust growth appears to be transitioning.
The strategist, Peter Oppenheimer, noted that investors have already accumulated substantial profits, and the outlook now points toward lower rates of return moving forward. With a strong track record of accurate market calls on Wall Street over many years, Oppenheimer's cautious stance dates back to early March when he adopted a defensive posture just before the market hit its yearly low later that month.
In most scenarios, the expectation is for returns to fall within the mid-to-high single digits over the next year, which would be a significant drop from the levels observed across various regions in the prior 12 months. However, Oppenheimer added that as long as economic growth persists, even these moderated returns remain relatively respectable, framing this as the core of their forecast.
Meanwhile, Citadel Securities' chief equity and derivatives strategist, Scott Rubner, outlined in a recent report that while the firm maintains a bullish outlook on US equities, the conditions that underpinned the August market rally are shifting. The short-term risk-reward balance has now tilted, according to Rubner. The positive momentum from earnings reports has largely concluded, with market focus firmly returning to macroeconomic variables.
Although retail demand and corporate buybacks continue to provide support, historical patterns suggest both forces tend to weaken by September. The substantial programmatic trading capital released during the July pullback has mostly been redeployed into the market already. Rubner highlighted that volatility has been compressed to very low levels, making downside protection tools like put options relatively inexpensive, all while the market enters its weakest seasonal period of the year.
For the first time since the July correction, Rubner now favors a strategy of reducing positions on strength and purchasing affordable protection rather than chasing further gains in the current window. He views September as a tactical downside risk window rather than the beginning of a full-blown bear market.
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