Report: US banking giant warns investors: “An ominous ‘warning signal’ is now flashing”

US banking giant Goldman Sachs has just issued a warning to investors.

In a new note to clients, the firm’s strategists explain that a number of fundamental factors indicate that a market correction is imminent, Investing.com reports.

Goldman cites declining real income growth, a slowdown in the country’s GDP growth and weakening consumer sentiment as headwinds at the start of the second half of the year.

Strategists say stocks may be overbought, citing the S&P 500’s recent outperformance relative to other markets.

They also point to the increasing concentration in the equity sector, with the ten largest companies in the index having the greatest weight since 1929. This is another negative factor.

Goldman’s team believes the election cycle could also act as a negative catalyst in the short term.

“Election concerns in the US and Europe could also affect consumer and business confidence in the coming months.”

According to Goldman, the data does not indicate that a long-term bear market is imminent. The company sees a slightly growing economy and the possibility of interest rate cuts as positive factors.

However, the team states that this “represents a warning signal that a correction and a period of higher volatility and lower returns is now more likely.”

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