The stock market has been having a great year so far, which has been driven mainly by stocks with exposure to artificial intelligence. However, this has some market participants starting to get worried. In fact, Goldman Sachs’ Tony Pasquariello noted that stocks have had a great run but warned investors to be aware of rising risks.
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He pointed out several issues, such as a growing U.S. deficit that is expected to hit $1.9 trillion. He also mentioned the increased exposure among traders and how the rally has been driven by a few stocks, which historically increases the risk of a selloff. However, it’s worth noting that Pasquariello isn’t making a call to exit the market. Instead, investors need to be disciplined and hedge risks.
Furthermore, he pointed to some positive factors, such as favorable U.S. financial conditions, strong mega-cap tech stocks, and ongoing economic and earnings growth. Still, Pasquariello advised reducing portfolio risk and maintaining high-quality investments as political uncertainties unfold.
Interestingly, Pasquariello isn’t the only analyst who has begun signaling caution. In fact, Barry Bannister from Stifel noted last week that the S&P 500 might fall to around 4,800 by mid-2026. However, analysts don’t appear to have a unified view of what is to come next, as others, such as Tom Lee from Fundstrat Global Advisors, have a much more optimistic outlook.
Is SPY a Buy Right Now?
Overall, analysts have a Moderate Buy consensus rating on the SPDR S&P 500 ETF Trust (SPY) stock based on 405 Buys, 91 Holds, and eight Sells assigned in the past three months, as indicated by the graphic below. After a 15.5% year-to-date rally, the average SPY price target of $606.79 per share implies 11.36% upside potential.
