Goldman Sachs reported that its risk appetite indicator has turned negative for the first time since March, suggesting a contrarian buying opportunity in the stock market. This shift comes amid deteriorating investor sentiment, particularly following significant losses in artificial intelligence-related stocks and semiconductor companies.
The iShares Semiconductor ETF experienced its longest losing streak in 20 years, which may have established a base for potential recovery.
Despite anticipated near-term volatility due to ongoing concerns about AI, geopolitical tensions in the Middle East, and upcoming midterm elections, Goldman believes that strong earnings, lower stock valuations, and lighter investor positioning could support equities as the year progresses.
Christian Mueller-Glissmann, head of asset allocation research at Goldman, emphasized that while the firm is optimistic about equities, it maintains an overweight position in cash and is underweight in credit and neutral on duration.
Other firms, such as Wells Fargo and Macro Risk Advisors, have also noted a rise in bearish sentiment, which they view as a potentially favorable signal for the market