US banking giant Goldman Sachs has just issued a warning to investors. In a fresh note to its clients, the firm’s strategists indicate that several fundamental factors suggest a market correction might be approaching, reports Investing.com.

Goldman highlights declining real income growth, a slowdown in national GDP growth, and weakening consumer sentiment as challenges as the second half of the year begins. The strategists believe that stocks may be overbought, pointing to the S&P 500’s recent exceptional performance compared to other markets. They also note the rising concentration in equities, with the ten largest companies in the index having the most significant influence since 1929, as another negative aspect.

Furthermore, Goldman’s team suggests that the election cycle could also act as a short-term negative catalyst. “Election concerns in the US and Europe may also impact consumer and business confidence in the coming months.”

While Goldman acknowledges that the data does not indicate an imminent long-term bear market, they point to a slightly expanding economy and the potential for rate cuts as positives. However, the team warns that it “does signal a correction and a period of higher volatility and lower returns is now more likely.”

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