Goldman Sachs Plunges 3.22% on Bear Market Warnings

On April 9, 2025, Goldman Sachs experienced a 3.22% drop in pre-market trading, reflecting investor concerns and market volatility.

Goldman Sachs has issued a warning about the potential for a prolonged bear market in the U.S. stock market. The investment bank's latest research report suggests that the current market is in an event-driven bear market, which could evolve into a cyclical bear market. This assessment has raised alarms among investors, prompting them to reassess their investment strategies.

Goldman Sachs has identified three types of bear markets: structural, cyclical, and event-driven. Structural bear markets are the most severe, typically caused by structural imbalances and financial bubbles, with an average decline of 60% and a recovery period of over a decade. Cyclical bear markets, on the other hand, are driven by rising interest rates, economic downturns, and declining profits, with an average decline of 30% and a recovery period of about five years. Event-driven bear markets are triggered by one-time shocks, such as the recent tariff increases, and usually have a shorter duration and less severe impact.

Goldman Sachs believes that the current market is in an event-driven bear market, but there is a risk that it could transition into a cyclical bear market due to rising economic recession risks. The bank has lowered its GDP growth forecast for the fourth quarter of 2025 to 0.5% and increased the probability of a U.S. recession to 45%. This has led Goldman Sachs to predict further market declines.

Despite the potential for a bear market rally, Goldman Sachs advises investors to take advantage of improved valuations to buy low and diversify their portfolios. The bank's bull-bear indicator remains high, suggesting that the market has not yet reached its bottom. Investors are encouraged to focus on long-term growth and dividend reinvestment strategies to maximize risk-adjusted returns.