US Bear Market Alert: BlackRock and Goldman Sachs Warn of Stock Market Crash

Are We Approaching a Bear Market in the US? Goldman Sachs and BlackRock Sounds the Alarm

Performance of US Stocks:

BlackRock, the largest asset management firm in the world, has cast a dim outlook on the American stock market. The firm has also changed its rating on US equities from “Overweight” to “Neutral” which indicates decreased confidence on American stocks. At the same time, Goldman Sachs has also raised concerns about a possible bear market in the United States.

What BlackRock Said?

BlackRock analysts including Jean Boivin and Wei Li are projecting that US equities may remain under pressure for at least the next three months. Escalating global trade wars or geopolitical conflicts have slowly weakened the overall investor sentiment. This has led to a decline in equities which fall under the category of risky assets.

To be on the safe side, BlackRock is now investing in short-term US Treasury bonds which tend to perform better in times of uncertainty.

An Imminent Recession?

BlackRock Chief Larry Fink recently mentioned that several US counterparts he regularly communicates with feel that a recession has already taken its toll on the US economy. This in turn has led to lower rates of interest for the US Federal reserves.These days, specialists think that the Fed may likely cut interest rates five times by 2025, although only two cuts were mentioned in their guidance.

What Is Goldman Sachs Warning About?

Goldman Sachs is claiming that the current situation may lead to a sharp stock market decline turning into a long-term “cyclical bear market” that could last two years with stock prices taking up to five years to recover.

For now, Goldman Sachs considers this a “event-driven bear market,” meaning they think that the fall is a result of one major reason – in this case, the trade wars.

Also Read : Understanding Price Action: Market Ups and Downs Simplified

What’s Happening on Wall Street?

Monday marked the day all three major US stock indexes, Dow Jones, S&P 500, and Nasdaq, dropped to their lowest level in 52 weeks.

Both the S&P 500 and Nasdaq are down by more than 20%, which puts them in bear market territory.

Despite some end of day recovery, the market remained extremely unstable and turbulent.