Reuters / Brendan McDermid
Goldman Sachs continues to recommend US equities to high-wealth clients despite stocks’ record-high prices, managing director Silvia Ardagna told Bloomberg.
Major US stock indexes reached record highs Friday, driven by positive trade-deal sentiment and a better-than-expected jobs report.
Many investors have been rotating out of equities in recent months, but the rally in US stocks “can clearly extend” if economic data remains strong, Ardagna said.
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Goldman Sachs continues to recommend US equities over other assets as stocks sit at record highs, managing director Silvia Ardagna told Bloomberg.
Major US stock indexes breached all-time highs Friday, driven by positive US-China trade-deal sentiment and a better-than-expected jobs report. President Trump said Friday the two nations could sign a so-called phase-one agreement in Iowa as soon as this month.
Wealthy clients are looking to cash in on trade-deal progress and US stocks are the recommended method, Ardagna said.
“The main returns in our view still come from having an overweight to US equities. The US has the prominence over others,” the managing director in the investment strategy group within Goldman’s Private Wealth Management said. The division manages about $500 billion in assets, according to Bloomberg.
Goldman touted US stocks over foreign equities as the global economic slowdown drags on nations around the globe. Germany’s central bank warned of upcoming recession in late October, citing a slump in its critical manufacturing industry. Hong Kong’s economy entered a recession in the third quarter after months of protests cut into its tourism and retail industries.
The Friday jobs report signaled economic resilience among US consumers and supported the Federal Reserve’s decision to pause rate cuts as the economy grows at a moderate pace.
Goldman’s recommendation arrives as investors rush from stocks into less volatile investments. The gap between flows out of equity funds and into bond and cash funds is the widest since 2008, Goldman analysts wrote on October 25. The analysts cited global economic deceleration and trade tensions for the move, but Ardagna noted that investors may have been too quick to rotate out of equities.
“The de-escalation of trade tensions between the US and China has triggered the question whether investors have been too negative and there could be some positive surprises,” she said. “If we get better economic data and there’s stabilization in the manufacturing and the services sector remains robust, this rally can clearly extend.”
President Trump echoed Goldman’s sentiments Monday morning, praising the US stock market’s performance and offering his own financial advice.
“Stock Market hits RECORD HIGH. Spend your money well!” Trump tweeted.
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