Market complacency is starting to wane as Goldman Sachs clients shift towards guarding against a major stock market downturn.

Amid escalating tensions in the Middle East, global stock market investors had mostly remained calm, but this confidence is now beginning to wane. Since the outbreak of the Iran war three weeks ago, the market has become increasingly concerned that this conflict will not be resolved in the short term, and the impact on the economy and stock market may be more severe than previously expected. Over the past two trading days, the S&P 500 index has fallen by 1.6%, breaking below the 200-day moving average and hitting a four-month low. The European Stoxx 600 index fell by 2.4% on Thursday, reaching a three-month low. According to the trading department of Goldman Sachs, clients who previously expected the Iran war to end quickly are now starting to have doubts. Goldman's Shawn Tuteja wrote in a report that while some clients are still bullish, others now either expect a market correction or believe that the market will slowly and continuously decline, similar to what happened in 2022. Tuteja wrote in the report on Thursday, "Although some still believe the situation will be resolved in the next one or two weeks, a new narrative is emerging, suggesting that the conflict may not see an end."