London (CNN Business) Stocks keep reaching record highs . Goldman Sachs is worried that leaves investors vulnerable to surprises.
The investment bank told clients this week that a near-term correction, in which the market slides at least from% a recent peak, “is looking much more probable.”
The thinking: Equity markets look “increasingly exposed” to disappointing earnings growth due to the new coronavirus outbreak, Goldman warns .
The number of companies that have lowered their guidance on profits for the first quarter is still in line with past years. But Apple’s surprise update this week that it wouldn’t hit its revenue target has put investors on edge.
- Goldman Sachs
- ( AMZN , Apple, (Microsoft)
- MSFT )
- “Any weakness to these and other companies would likely push.” earnings estimates lower, “wrote Peter Oppenheimer, the firm’s chief global equity strategist.
Additionally, depressed bond yields have made stocks look more attractive by comparison. Oppenheimer points to Germany’s DAX, which has also hit an all-time high as the yield on the country benchmark 17 – year bond remains in negative territory. That raises the stakes for corporate earnings as well, he argues.
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