Goldman Sachs is warning that the risk of a stock-market pullback is rising as investors’ once-strong appetite for risk begins to fade. The bank’s strategists said their Risk Appetite Indicator has fallen to a more neutral level of about 0.2, marking a clear deterioration from the “Goldilocks” conditions that supported markets through the summer. While Goldman’s economists expect U.S. growth to reaccelerate in 2026, the Wall Street investment bank said the probability of a market sell-off outweighs the odds of a large rally. .SPX YTD mountain S & P 500 year to date “The pick-up in drawdown risk has been driven by elevated equity valuations and a weak U.S. business cycle,” the strategists wrote. “Our equity asymmetry framework suggests that the probability of a sell-off is higher than that of a large rally.” The S & P 500 has rebounded aggressively from its April lows to score consecutive record highs, bringing its 2025 gains to more almost 16%. On Friday, cool September inflation data raised investor optimism that the Federal Reserve will keep cutting interest rates, lifting the present value of future profits and possibly boosting corporate earnings too. Goldman is recommending adding downside hedges such as S & P 500 options overlays with drawdown probabilities at current levels. Even so, the bank said it remains “modestly pro-risk” in its overall asset allocation. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
Goldman Sachs says risk of equity drawdown is rising as stocks hit record
