Goldman Sachs believes the stock market is poised for a rebound over the next three months as its proprietary sentiment indicator is flashing a contrarian buy signal. The Wall Street firm’s U.S. equity sentiment indicator (SI), which tracks institutional, foreign and retail investor positioning, has declined to a reading of -0.6, the sharpest move in a 6-month period since 2020. “Sharp drops in our SI have historically preceded above-average gains in the S & P 500 during the subsequent 3 months,” wrote strategists led by David Kostin. A reduction in hedge fund net leverage, an increase in mutual fund cash balances and a decline in foreign investor net demand contributed to the large decline in the Goldman indicator. .SPX YTD mountain S & P 500 in 2025. Volatility recently spiked after President Donald Trump ‘s aggressive tariffs on leading trading partners triggered fears of an economic slowdown. The S & P 500 suffered a monthlong pullback that tipped the benchmark into a 10% correction earlier this month. The S & P 500 posted a 0.5% advance last week after a four-week-long decline. The index is now about 7.8% below its all-time high reached in February. Goldman was also advising clients to buy companies that rely on domestic sales and steer clear of those with a high proportion of overseas revenue, as President Donald Trump’s April 2 tariff deadline looms.
