Investors In The Stock Market Should Expect Lower Returns Over The Next Months, Top Bank Strategist Says

Goldman Sachs chief global equity strategist Peter Oppenheimer said equity markets around the world will likely see lower returns over the next 12 months.

Speaking to Yahoo Finance, Oppenheimer said that "the S&P 500 and indeed other equity markets around the world have had a phenomenal return over the course of the last year and year to date."

"So we've already had a lot of good returns behind us. We would expect lower returns from here," he added, claiming that he believes the figures will be around the mid- to high-single-digits. "But still, you know, relatively decent so long as economic growth continues. That's our expectation," he said.

One key factor is the rout in global bonds taking place at the moment. For now, stocks have mostly continued to climb, but investors are becoming more cautious as the benchmark 10-year yield approaches 5% and the earnings season that helped support the market comes to an end.

The 10-year Treasury yield reached about 4.79% this week, up more than 80 basis points since the start of March and its highest level since November 2023, while the S&P 500 remains up more than 11% in 2026. Reuters detailed that investors increasingly view a rapid move toward 5% as a level that could prompt traders to reduce risk and put fresh pressure on equity valuations.

That concern is growing as the second-quarter reporting season winds down, removing one of the strongest supports for stocks this year. Corporate profit growth has repeatedly helped investors look past higher rates, geopolitical risks and concerns about government borrowing, but Truist Advisory Services chief investment officer Keith Lerner told the outlet that macroeconomic factors are likely to command more attention once earnings are no longer dominating the market.

The rise in yields has been driven by several forces at once, including persistent inflation, large government borrowing needs, stronger-than-expected economic activity and renewed pressure from higher oil prices. BlackRock Investment Institute said this week that sticky inflation, heavy public borrowing and growing private investment needs give investors little reason to expect pressure on long-term yields to fade soon.

A 5% yield also matters because Treasurys begin offering a more attractive alternative to stocks while borrowing becomes more expensive for companies and households. The 10-year yield last touched 5% in October 2023, when equities were under broad pressure. Highly leveraged companies or businesses dependent on refinancing could feel particular strain if yields remain near that level.

Technology and AI-linked stocks may be especially sensitive because much of their valuation depends on profits expected far into the future. Higher discount rates reduce the present value of those earnings, while the enormous capital spending tied to data centers, chips and power infrastructure is also increasing demand for financing. BlackRock said the AI buildout remains a major source of capital demand even as higher borrowing costs make investors more selective.