Prepare for an ‘Extreme’ Stock Market Rally, Says Goldman Sachs

FomoAnxiety · 2026-03-11T16:48:13+00:00

Goldman Sachs suggests a potential stock rally if the U.S.-Iran war ends, with expectations of a 2% to 3% rise. However, ongoing labor market weakness and prolonged conflict may pose risks to the market.

FomoAnxiety

2026-03-11 16:48:13

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With short exposure at its highest level since September 2022 and speculative investors holding long positions through volatility, Goldman Sachs has floated the possibility of an aggressive rally in stocks if the U.S.-Iran war grinds to a halt.

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“If we were to get a headline declaring the conflict over, you could see a sharp move higher at the index level,” said Goldman’s John Flood. “It could be 2% to 3% in a straight line, and most of that would be that macro product covering.”

Flood Flags Greater Upside Risk for Stocks

Flood added that right-tail risk is “more extreme” than left-tail risk. Right-tail risk refers to the possibility of outsized gains, while left-tail risk indicates the odds of severe losses.

However, Flood warned that persistent weakness in the labor market and a prolonged war could create issues for the stock market. Last week’s nonfarm payrolls report disappointed investors, although Flood believes that more data is needed before drawing conclusions.

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