Goldman Sachs (GS) President John Waldron believes that stock markets could still fall further, as investors become cautious and look ahead to Nvidia’s (NVDA) upcoming earnings report. Speaking at the Bloomberg New Economy Forum in Singapore, Waldron said that technical signals suggest more downside is possible and that investors are focused on whether AI investments are really paying off. He added that recent market pullbacks might be healthy after a strong year so far, but concerns remain about whether AI-related spending is justified. Nvidia’s earnings, he said, will be an important test for the market.
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So far this month, the S&P 500 (SPY) is down over 3% (its worst-performing month since March), while volatility has increased sharply. Bob Diamond, former Barclays (BCS) CEO and now head of Atlas Merchant Capital, also spoke at the forum and called the recent drop a “healthy correction,” not a sign of a larger crash. However, he did point out that high government spending and rising debt are worrying factors for markets. Diamond said that AI will likely be a long-term benefit by helping lower inflation and boost productivity, but admitted that some investors may be confused by the currently high valuations.
Waldron also discussed credit risks, especially in subprime lending to lower-income consumers, where he said underwriting standards have slipped. Still, he doesn’t expect a credit crisis as long as the economy holds steady. Apollo Global (APO) CEO Marc Rowan agreed, saying he sees no major threats to the credit system and he dismissed fears of hidden problems. Meanwhile, Algebris Investments CEO Davide Serra warned of a “significant correction” and suggested that investors reduce their tech exposure.
Is SPY Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SPY stock based on 416 Buys, 81 Holds, and seven Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average SPY price target of $791.03 per share implies 19.5% upside potential.
