Vendor on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Goldman Sachs sounded the alarm on Wednesday to patrons about a possible correction in the stock market, noting investors are underestimating how big of a risk the coronavirus really is.
“We believe the artistic risk is that the impact of the coronavirus on earnings may well be underestimated in current stock prices, suggesting that the chances of a correction are high,” strategist Peter Oppenheimer wrote in a note.
Investors have been grappling with the workable ramifications of the coronavirus outbreak in recent week. But except for a few pullbacks, the major U.S. stock indexes have taken the newscast in stride. On Wednesday, the S&P 500 and Nasdaq Composite jumped to record highs. Oppenheimer thinks the market could be in plague if earnings expectations aren’t ratcheted down.
“Equity markets are looking increasingly exposed to near-term downward jolts to earnings growth,” Oppenheimer said. “While a sustained bear market does not look likely, a near-term corrigendum is looking much more probable.”
— CNBC’s Michael Bloom contributed to this report.
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