Wall Street Firms Stay Bullish on Equities Despite October Volatility and Recession Warnings
Despite recent market turmoil and warnings of an impending recession, some prominent Wall Street firms like Goldman Sachs maintain a bullish outlook on equities. Meanwhile, investors are keeping a close eye on October, a month notorious for major stock market crashes.
Global debt is surging, and borrowing costs are soaring, with recession signals emerging across various indicators. Yet, some firms like Barclays forecast nearly a 10% earnings increase for the S&P 500 in 2025 and a further 13% rise in 2026. This optimism comes despite the index trading at valuations last seen before the dot-com bubble burst.
October has been a volatile month historically, with notable crashes including the 1929 crash, Black Monday in 1987, and the 2008 crisis. This October, volatility is up by 21% compared to any other month since 1896. Some investors are seizing this increased volatility as an opportunity, with firms like Goldman Sachs remaining optimistic on equities. They believe there may be buying opportunities after recent price drops, such as the London Stock Exchange Group stock which has fallen by 20% over the past 12 months. Experienced investors are preparing for potential turbulence, focusing more on positioning than predicting market movements.
While global debt and borrowing costs continue to rise, and October's historical volatility persists, some Wall Street firms remain optimistic about equities. Investors with cash reserves are poised to capitalize on lower prices if volatility triggers massive selling. However, the market's historical volatility in October serves as a reminder of the potential risks and the need for cautious optimism.
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