The stock market doesn’t look as appealing after its recent rally, says Goldman Sachs’ Tony Pasquariello. The S & P 500 snapped an eight-day win streak on Tuesday, marking a pause in a recovery rally from a rocky start to August. Pasquariello, the firm’s global head of hedge fund client coverage, said the surprising strength of corporate and retail buying following the recent tumult could mean gains are capped. As an example, Nvidia is up more than 40% from its Aug. 5 intraday low, as of Tuesday’s close. Meanwhile, the S & P 500 is up about 9% from its intraday low on Aug. 5, the day the index posted its worst session since 2022 during a global market sell-off. “Risk/reward at this point in the marketplace isn’t all that alluring,” Pasquariello told CNBC’s ” Closing Bell ” on Tuesday. “The market’s done a bunch of work over the past eight or nine days.” NVDA 1M mountain Nvidia In particular, he expects that the setup for megacap tech will be more demanding than it had been over the past year. While he said the so-called Magnificent Seven stocks will continue to have a “good story,” he expects performance will broaden out. “Relative to the hottest moments of June or July, I think the shine is off the [megacap tech] space a little bit,” he said. “Why? Because the eye-popping nature of these beats is a little bit less than it had been the prior year and a half.” “If the Magnificent Seven delivered 18% earnings growth next year, on top of the buyback, on top of the capex, I still think it’s a good story,” he added. “It’s just a more demanding setup than it’s been.” Overall, however, Pasquariello has a bullish outlook on stocks, saying that better-than-expected earnings growth, solid gross domestic product growth and the start of interest rate cuts will bolster equities.
