As of February 2, Goldman Sachs Group Inc.’s tactical specialist, Scott Rubner, has issued a cautionary note to investors, suggesting that the U.S. stock market might face a significant downturn. According to Rubner, the risk of the market moving lower is now greater than it rallying further. This insight follows a notable dip in the S&P 500 Index, marking its most substantial decline in recent months, fueled by concerns over Big Tech earnings and comments from Federal Reserve Chair Jerome Powell hinting at the improbability of an interest rate cut in the near future. Despite a slight recovery on Thursday from Wednesday’s downturn, Rubner emphasizes the challenges facing the equity market, including high expectations set for February, increased leverage, and speculative positioning, alongside a decrease in market liquidity.
Analysis and Previous Forecasts
Rubner’s latest analysis builds on his previous bearish stance from last week, underscored by an observed seasonal trend where the latter half of February typically sees the poorest two-week performance in U.S. equities. This perspective aligns with his accurate prediction from early November, anticipating a robust rally towards the year’s end, which saw the S&P 500 Index rising approximately 14% in the final two months of 2023 and achieving a 2% increase in 2024 thus far.
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