Goldman Sachs warns that there is a 30% risk of a stock market correction in the US by 2025, with Trump's policies and inflation being key drivers.

In Las Vegas, there is a saying: "Everyone loves a gambler until they lose." If you have ever witnessed a crowd cheering around a gambler who is on a winning streak, you will understand the meaning of this saying. However, good luck always comes to an end, and the stock market is no exception. Analysts at Goldman Sachs Group, Inc. have been closely monitoring the market dynamics and they believe that the current market is overheated, and a correction of up to 30% may occur in the future. Like all investment institutions, the analyst team at Goldman Sachs Group, Inc. is dedicated to analyzing stock market data, attempting to predict recessions that may cause significant losses to Goldman Sachs Group, Inc. and its clients. Despite the inherent risk of a significantly overheated market leading to a sharp correction, Goldman Sachs Group, Inc. also sees another potential threat: the uncertainty surrounding the economic policies of the upcoming Trump administration. Goldman Sachs Group, Inc.'s data shows that the risk level has sharply increased since September 2024. The key risk indicators that they are tracking include: Overall economic growth in the U.S.; Inflation (which may rise again, hindering the Fed's rate cuts); Direction of U.S. economic policy; Rise in stock valuations. Goldman Sachs Group, Inc. analyst team member Andrea Ferrario pointed out, "Market variables contributed significantly to the rise in inflation. Over the past few months, commodity prices and the U.S. balance of payments inflation rate have been steadily climbing." Goldman Sachs Group, Inc.'s report also emphasized that the Trump administration's tariff policy will become the "center" of increasing global trade uncertainty, and have profound effects on the market. In addition, the uncertainty surrounding European economic policies has increased the risk of significant market adjustments. Like the Fed, the European Central Bank also attempted to control inflation by managing interest rates in 2024. Goldman Sachs Group, Inc. states that uncertainty in the European region is at "historical highs," leading to a decline in European stock market valuations. Ferrario further emphasized this threat: "While the predictive power of policy uncertainty on stock market declines is inconsistent, with the rise in policy uncertainty and political risk from GEO Group Inc, the likelihood of a stock market downturn becomes elusive." Since 1950, Goldman Sachs Group, Inc. has tracked the risk of global stock market declines. Currently, the risk coefficient is approaching 30%, enough to sound the internal alarm. In Goldman Sachs Group, Inc.'s history of tracking downturn risks, the largest declines and adjustments have occurred when the risk coefficient exceeded 35%. Although the current risk rating has not reached this level yet, it is gradually approaching dangerous territory. For example, if Trump's tariff policy leads to final prices of consumer goods exceeding consumer tolerance, the publicly listed companies manufacturing and selling these goods may face significant profit losses, thereby exerting massive downward pressure on the stock market. The risks faced by the technology industry in this scenario are particularly pronounced. In 2024, the Nasdaq and S&P 500 indices surged significantly due to the strong performance of tech stocks such as NVIDIA Corporation (NVDA.US), but NVIDIA Corporation is not an isolated case. Due to the strong demand for artificial intelligence in data center real estate and high-performance chips or semiconductors, stocks from multiple industries have profited. However, if tariffs lead to price increases in these products, the stock prices of the "Tech Big Seven" and popular Nasdaq stocks may be severely impacted. It is well known that many institutional investors, retail investors, and large funds have heavily invested in tech stocks. These investments did indeed yield handsome returns in 2024, but if the proposed tariffs cause serious damage to the tech and consumer goods industries, a significant price drop is not impossible.