Parts of the market are in a bubble, but they pose low risk to the S&P 500, Goldman says

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Parts of the market are in bubbles, but they are unlikely to take the overall market down with them when they pop, according to Goldman Sachs.

The Wall Street firm said exuberance around special purpose acquisition companies, as well as around investor interest in companies with negative earnings are cause for concern; however, these speculative areas don’t pose a risk to the overall level of the S&P 500.

“Pockets of the market have recently demonstrated investor behavior consistent with bubble-like sentiment,”  David Kostin, Goldman Sachs’ chief U.S. equity strategist, told clients. “But these excesses present low systemic risk to the broader market given their modest share of market cap.”

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