Goldman Sachs predicts U.S. stock market rebound soon

Goldman Sachs believes the stock market may recover in the next three months. Their sentiment indicator, which tracks different types of investors, has dropped sharply. This decline is the biggest seen in six months since 2020. The indicator currently stands at -0.6. Goldman noted that this kind of sharp decline often leads to significant gains in the S&P 500 index soon after. According to their strategists, a decline in hedge fund activity and cash increases in mutual funds helped push the indicator lower. The recent market has faced challenges. A rise in volatility occurred after President Donald Trump imposed high tariffs on key trading partners. This situation raised concerns about a possible economic slowdown. As a result, the S&P 500 experienced a month-long decline, reflecting a 10% correction earlier this month. Last week, the S&P 500 made a small recovery, gaining 0.5% after four weeks of losses. However, it remains about 7.8% below its peak from February. Goldman Sachs also recommends investing in companies that focus on domestic sales while avoiding those heavily reliant on international revenue, especially with upcoming tariffs on foreign goods.