Goldman Sachs warns of imminent correction in US stocks

The US stock market can flip into a correction territory as retail and institutional buyers are running out of steam, Goldman Sachs Group Inc.’s Scott Rubner, the bank’s managing director for global markets and tactical specialist, wrote in a note on Feb. 20.

“The flow dynamics change dramatically starting Monday and I am on correction watch,” Rubner added.

US stocks hit a new record high on Wednesday, Feb. 19, despite uncertainty surrounding tariffs, interest rate trends, and Federal Reserve policy.

The strong gains were driven by resilient corporate earnings and robust inflows into stocks from both individual and institutional investors. However, these dynamics may shift starting next week, according to Rubner.

The analyst expects demand from retail investors—who have recorded a record pace of inflows into US stocks this year—to slow down ahead of the tax payment season in March.

Additionally, inflows from pension funds could dwindle due to seasonal trends. Typically, January and February are the strongest months for asset allocations, followed by weaker inflows in March.