U.S. stock futures are pointing lower ahead of the open, with the S&P 500 down about 0.6% as geopolitical tensions persist and oil prices move back above the $100 level. The move comes as uncertainty around the U.S.–Iran situation remains unresolved despite a ceasefire extension, while higher energy prices revive concerns about inflation and the potential impact on economic growth.
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Trade QQQ with leverageGoldman Sachs economist Jenny Grimberg argues that the current backdrop leaves markets exposed to further downside if conditions deteriorate again. She notes that the rebound in equities following the ceasefire announcements has already reversed much of the earlier risk-off move, but warns that “while we don’t think this relief is premature, it nonetheless leaves markets vulnerable to further negative developments.”
Oil remains a central piece of that risk equation. Grimberg points out that Brent crude moving back above $100 reflects a growing imbalance in the market, with supply disruptions potentially lasting longer than initially expected. The economist explains that risks to oil forecasts are tilted higher due to ongoing constraints around key shipping routes and the possibility of more persistent supply losses in the Middle East.
At the same time, Grimberg highlights that recent price behavior has been influenced by factors that may not hold. According to the economist, part of the moderation in prices following the ceasefire came from declining risk premiums, inventory drawdowns, and softer spot demand. However, she cautions that “destocking isn’t sustainable as inventories have a natural lower bound,” meaning the market will eventually need to adjust through either a recovery in supply or a slowdown in demand. She adds that this demand reduction process has already begun, which introduces another layer of uncertainty for growth in the coming months.
Looking beyond the near term, Grimberg maintains a constructive stance on equities. She expects earnings growth to continue supporting higher index levels, with a forecast of around 12% EPS growth this year potentially lifting the S&P 500 to 7,600 by year-end. That outlook suggests that while short-term volatility may persist, the broader trajectory remains upward as long as corporate fundamentals stay intact.
Still, her positioning advice reflects the current uncertainty. Grimberg sees value in maintaining or even increasing hedges, particularly given the risk of another oil-driven shock. At the same time, she favors exposure to companies with durable earnings drivers, including those benefiting from long-term investment in infrastructure or those less vulnerable to disruption from artificial intelligence.
Disclaimer: The opinions expressed in this article are solely those of the featured economist. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.