Goldman issues warning: S&P 500's short-term rally faces "headwinds" Any potential rebound may be short-lived.

Goldman strategists believe any rebound in the S&P 500 could be short-lived given the market’s concerns about the US economy. Strategist David Kostin noted in a report that investors’ exposure had declined as the benchmark briefly erased its gains since 2025 last week. However, the exposure level is still not low enough to signal “tactical upside from underweight positions,” he said.“An improvement in the US growth outlook is needed to fully reverse the recent weakness in US equities,” Kostin said, cutting his full-year earnings growth forecast to 9% from 11%.Kostin was one of the more bullish voices on US stocks in 2024. He said in 2025 that “equity returns will be lower than last year and in line with the trajectory of earnings growth.”This year, US stocks have lagged amid concerns about the high valuations of tech giants and skepticism about whether President Donald Trump’s “America first” policies will spark inflation and slow the economy. The S&P 500 has risen about 1% this year, while the msci World ex-US index has gained 5%.Scott Rubner, director of global markets and tactical strategist at goldman, also said he believes the demand for stocks is not enough to sustain the rally. Rubner turned bearish last month as retail and other buyers’ inflows gradually slowed, noting the market was in the final stages of positioning.Michael Wilson, a strategist at morgan stanley who was a staunch bear until mid-2024, also believes stocks are more sensitive to the decline in bond yields than the rise in economic growth.