Goldman issues stock warning

After a rally led by large-cap tech companies that sent the S&P 500 to record highs this year, it may be time to pump the brakes, according to Goldman Sachs. “This is a bull market, but the potential for a downside is increasing,” Tony Pasquariello, head of the Wall Street Bank’s global hedge fund desk, wrote in a note to clients on Friday. The S&P 500, which has broken records 31 times this year and closed at 5,460 on Friday, was led by large-cap tech companies in the rally, driven by the artificial intelligence trend. The market could still find support from improving financial conditions and large-cap companies, Pasquariello said. “As long as the economy is growing and profitability is improving, a significant sell-off is rare,” the Goldman executive wrote. However, Pasquariello also noted that the risks to the bull market narrative have increased, and sees the increasing US budget deficit, the increasing stock positions of households and institutional investors, and the narrowing of the rally area in some large-scale companies as the main risks. Pasquariello states that investors can hedge their portfolios with put options.