Goldman Sachs and Bank of America warn rally risks a market pullback

Goldman Sachs is still pointing to gains for stocks over the next 12 months, but its own traders are now gaming out what happens if the rally runs out of buyers. The warning is less about panic than posture: after a sharp rebound from the early-April lows, Goldman’s desks are asking whether the move has become a bull trap, with technical tailwinds fading and crowded positioning leaving little room for disappointment.

That caution has been building for months. In January 2025, Goldman Sachs Research chief global equity strategist Peter Oppenheimer said the S&P 500 had posted one of its strongest two-year stretches since 1928 and warned that equities were “priced for perfection,” vulnerable to setbacks from weaker growth, softer earnings or higher bond yields. Goldman’s own equity work also flagged unusually high market concentration, with the five biggest U.S. stocks making up roughly a quarter of the index, a setup that makes the market more fragile when leadership narrows.

By late March 2026, the message had sharpened further. Goldman published a video titled “Is a Further Equity Correction Ahead?”, recorded on March 20, in which Oppenheimer discussed whether equities were facing a correction or even a bear market. That followed a May 2025 trading-floor episode, “Fade the S&P 500 rally?”, where Goldman’s cross-asset traders, including Brian Garrett, examined how smart money was positioning as the index rebounded from its early-April lows.

The firm’s longer-term view is still constructive. Goldman’s 2026 outlook calls for the S&P 500 to rise 12% this year and global stocks to return 11% over the next 12 months. But that optimism now sits alongside more explicit near-term caution, and the firm’s traders are focused on the trigger points that could decide whether the rally extends or slips. Those include fund flows, how extended positioning has become, and whether the market can keep leaning on a handful of megacap leaders if growth data cools.

Bank of America is sounding a similar note. In its December 2, 2025 outlook, BofA Global Research said investors were bracing for more volatility in 2026, forecast U.S. GDP growth of 2.4%, and projected 14% earnings-per-share growth but only 4% to 5% S&P 500 price appreciation, with a year-end target of 7,100. BofA also said the AI-driven equity boom has become a defining feature of a “K-shaped” economy and suggested the market may be shifting from a consumption-driven bull market to a capex-driven one.

For Goldman employees on trading floors and in client coverage, the split matters. The firm is still telling the market to expect upside, but the language has moved from bullish momentum to defense. If flows weaken and technical support gives way, the risk is not just a softer tape. It is a market that forces strategists, salespeople and traders to explain why the rally that looked unstoppable was actually built on thinner support than it seemed.