Stock Markets Face Lower Returns Over Next Year

Investors in the stock market can expect lower returns over the next 12 months, according to Goldman Sachs' chief global equity strategist Peter Oppenheimer. He believes that the S&P 500 and other equity markets around the world have already had a phenomenal return over the last year and year-to-date.

Oppenheimer stated that 'the S&P 500 and indeed other equity markets around the world have had a phenomenal return over the course of the last year and year to date.'

He expects lower returns from here, estimating them to be in the mid- to high-single-digits. Oppenheimer believes that as long as economic growth continues, these returns will still be relatively decent.

The key factor driving this expectation is the rout in global bonds, with stocks mostly continuing to climb despite a 10-year Treasury yield approaching 5%. The benchmark 10-year yield has reached its highest level since November 2023, at around 4.79%, up over 80 basis points since March.

Investors are becoming more cautious as the earnings season that supported the market comes to an end. Corporate profit growth has helped investors look past higher rates and other concerns, but once earnings are no longer dominating the market, macroeconomic factors will command more attention.