Strategists at Goldman Sachs (GS) recently suggested that investors should view any pullback in the stock market as a buying opportunity, rather than the beginning of a bear market. A team led by Peter Oppenheimer noted in a report that despite “significant headwinds” facing risk assets from geopolitical conflicts in the Middle East and the disruptive impact of artificial intelligence (AI), the resilience of economic fundamentals and strong corporate earnings growth will limit the depth and duration of this correction.
Oppenheimer stated: “Given current valuation levels, we believe the risk of a market correction is high, but we expect this to present a buying opportunity. The risk of a longer, deeper bear market is relatively low.”
The report analyzed that global stock markets experienced a volatile start this year. Initially, concerns that AI might disrupt corporate business models led to sell-offs in most sectors; subsequently, the outbreak of geopolitical conflicts further impacted the markets. However, at the index level, the overall market remained relatively stable, characterized mainly by rapid rotations among sectors and individual stocks, as well as increased volatility. The Goldman Sachs team believes that as the stock market rally gradually broadens from a few sectors to different regions and investment styles, valuations across global equity markets have risen to above-average levels. Compared to the past 20 years, valuations in almost all sectors are in expensive territory. Coupled with a strong bull market led by the U.S., this makes the stock market more susceptible to potential shocks, such as the threat posed by war to energy markets.
Oppenheimer further pointed out that the longer this uncertainty persists, or the more severe the impact on energy supplies, the greater the market’s concerns about economic growth and inflation risks will become. However, he also recalled that most geopolitical shocks in recent years have not had a long-term impact on the markets.
Following Goldman Sachs, BTIG has become another institution releasing optimistic signals about the U.S. stock market, joining the bullish camp. BTIG’s Chief Market Strategist, Jonathan Krinsky, stated: “The market bottom has been confirmed, and now it’s time to shift from defense to offense.” These remarks came as the S&P 500 index rebounded from its previous low. The index closed up 0.8% that day, recapturing the 6800-point level. Krinsky noted in a report to clients that the index has broken through key technical levels, suggesting that even if further pullbacks occur, they are likely to rebound quickly, potentially setting a “bear trap” for shorts betting on declines.
Previously, better-than-expected labor market data and expansion in service sector activity jointly propelled U.S. stocks to recover from their decline, partially offsetting market concerns about the persistence of geopolitical conflicts. Krinsky believes that with the S&P 500 reclaiming key support levels, multiple sectors have likely found a bottom. He wrote: “We believe sectors such as airlines, consumer discretionary, banks, cryptocurrencies, software, and Chinese stocks have bottomed out, while sectors like energy and consumer staples are showing signs of peaking.”
Amid concerns over the conflict, energy stocks have benefited from rising oil prices, with their cumulative gains in 2026 expanding to 25%. Meanwhile, industrial sectors, including airline stocks, have been dragged down by the surge in oil prices.
Overall, the S&P 500 has shown weakness since October last year, with traders closely watching whether the index can firmly hold the 7000-point milestone. A strategy team led by Scott Chronert at Citi (C) acknowledged that short-term risks persist in the market but also noted that despite issues like concerns over the AI shock and a sharp sell-off in software stocks this year, the S&P 500 has remained largely flat so far. They believe internal market rotation is key to breaking the deadlock. However, if oil prices continue to surge, impacting inflation, Federal Reserve policy, and the economic landscape, this rotation will face challenges. Therefore, further observation of developments is needed to more accurately assess the ultimate impact.
