Goldman Sachs warns that the “Goldilocks” summer for investors may be ending, as underlying risks could send stocks tumbling. Stable economic growth, moderate inflation, and strong earnings season fueled by Big Tech’s AI spend and hopes for an interest rate cut have created a summer rally. However, the current calm could turn into a storm if growth slows or the Fed tightens monetary policy. Goldman’s equity asymmetry framework suggests a major market rally is unlikely, with an elevated risk of a sharp market decline due to high stock valuations and weakening business cycle. The US stock market rally has been driven by large-cap tech stocks, with little broader market participation. Goldman raises concerns about macroeconomic challenges in the second half of the year, including the ongoing impact of tariffs, uncertainty around Fed policy, and growing geopolitical risks, which could weigh on the economy and corporate earnings.

Read more at Yahoo Finance: Why Goldman Sachs says the ‘Goldilocks’ stock market may get hit