Investing.com -- Goldman Sachs analysts are cautioning that “confidence in the US growth story is moderating” and the U.S. stock market may continue to lag behind other global markets.
Goldman analyst Peter Oppenheimer points out that “the reversal of fortunes between the US and other stock markets” has been driven by a shift in economic conditions.
The S&P 500 has fallen 8% and the Nasdaq 12%, while Europe and China have seen increases of 7% and 14%, respectively, in U.S. dollar terms.
According to Oppenheimer, the market has shifted due to “US economic growth... moderating from a high level, while growth prospects are improving from a low level in some other parts of the world and, particularly, in Europe and China.”
Analysts believe that “tariff fears are starting to weigh on US confidence more than in other regions,” contributing to a “shift in relative risk premia.”
Further, “technology, the dominant sector in the US equity market and for so long a source of relative strength, has started to underperform led by its index heavyweights.”
This has reportedly caused concerns regarding the sustainability of U.S. market outperformance.
In light of these developments, the analysts recommend “geographic and sector diversification” to improve risk-adjusted returns.
They suggest that “the reversal of fortunes for Europe and some other markets relative to the US likely has further to run.”