US Stocks: Goldman says global equities face correction risks, but bear market unlikely

Goldman Sachs sees "correction risks" to global stocks in the near term due to worries about geopolitics, AI disruption and elevated valuations, though the Wall Street bank sees limited room for a bear market.

"We see correction risks as high given current valuations, but expect this to present ‌a buying ⁠opportunity ⁠with relatively low risk of a more protracted and deep bear market," Peter Oppenheimer, chief global equities strategist at Goldman Sachs, said in a note on Wednesday.

A bear market is confirmed when an index closes at least 20% below its most recent record high finish, according ​to a widely used definition. It confirms ⁠a correction ‌if the index closes 10% or more below ​that level.


Global ​equities have been rattled since the start ⁠of the year by fears of AI disruption to ​businesses, massive AI spending from Big Tech and ​most recently, the Middle East conflict.

The U.S.-Israeli air war against Iran has heightened fears of an oil price shock, higher inflation and economic uncertainty. That, combined with elevated equity valuations, has prompted investors to shun risky assets in favor of safer ‌ones.

The MSCI's All Country World Index, a gauge for global equities performance, declined for a fifth straight session ​on Wednesday, ​and was down ⁠about 4% from its record high. The benchmark S&P 500 is down 0.4% so far this year.

Robust earnings growth, particularly in the ​U.S. and emerging markets, and potential for strong economic growth will keep risks low for a deeper bear market, Oppenheimer said.

"We continue to recommend broad geographical, factor and sector diversification as a way of improving risk adjusted returns," Goldman added.