Goldman: Bear market unlikely after U.S. election, economic recovery to continue supporting U.S. stocks

A team led by Andrea Ferrario, a strategist at Goldman, said the chances of a bear market in the next 12 months were just 18%, even accounting for the risk posed by Tuesday's presidential election, as the economic recovery would continue to support the stock market.The S&P 500 has risen about 20% this year, after surging nearly 25% in 2023, led by soaring large-cap tech stocks. Evidence of the US economic recovery has supported the rally, though bond yields have ticked higher this month amid uncertainty about the depth and breadth of the Fed's easing cycle and the US election."Markets should be able to digest higher bond yields as long as they are driven by stronger economic growth," Goldman strategists wrote in a note, though they warned of the potential for a volatile market after the US election.The strategists said the economic backdrop remained friendly despite recent signs of weakness. Recent data showed that job growth slowed to its lowest level since 2020 in October, as hurricanes and major strikes took their toll, while the road to lower inflation remained bumpy.Still, the US economy expanded at a robust pace in the third quarter, extending its strong growth for several quarters, and the unemployment rate remained low.