Goldman Sachs strategist Tony Pasquariello said the U.S. bull market will continue despite potential volatility following Labor Day.
This outlook is critical for investors navigating a period of seasonal instability and fluctuating valuations in high-growth sectors. The persistence of a bull market suggests that underlying corporate fundamentals remain strong enough to withstand short-term shocks.
Pasquariello pointed to strong earnings from S&P 500 companies as a primary catalyst for this resilience. He said that a cleaner positioning of portfolios is also expected to support the market, even as investors face post-holiday risks. The current bull market is now in its fourth year [1].
While Pasquariello remains optimistic, other analysts have cautioned against overreacting to specific sector dips. Ben Snider said, "Investors shouldn't mistake the recent turbulence in AI stocks for the start of a broader market breakdown."
However, the internal outlook at Goldman Sachs is not entirely uniform. The firm has flagged three possible scenarios for stocks [2]. While the primary view favors continued growth, one of these scenarios includes a potential "catch-down" valuation collapse, a risk that could effectively end the bull market [2].
Despite these contradictory risks, the prevailing view from Pasquariello emphasizes that the broader market structure is well-positioned. The focus remains on whether S&P 500 earnings can continue to outpace the volatility typically seen in early September.
“The current bull market is now in its fourth year.”
The divergence between Pasquariello's optimism and the firm's warning of a 'catch-down' collapse highlights a tension in current market valuations. While corporate earnings provide a fundamental floor, the possibility of a valuation correction suggests that the market is sensitive to any earnings miss or macroeconomic shift, making the post-Labor Day window a pivotal test for the four-year trend.
