Traders are betting on the “fear index” to soar by 1100%

The most optimistic strategist on Wall Street is predicting a decline in stock prices.

Goldman Sachs has cautioned that the stock market may experience fluctuations in the upcoming months.

Before a recession, Morgan Stanley recommends constructing a defensive portfolio.

Goldman Sachs has cautioned that US stocks will be under pressure until the end of 2023 due to the uncertainty in the US economy. It is predicted that GDP growth will drop from 3.1% in the third quarter to 1.3% in the fourth quarter of 2023, and inflation is expected to start increasing again.

The bank believes that investors should focus on shares of companies that pay dividends and have share repurchase programs, despite the fact that certain factors may temporarily reduce investor confidence in a soft landing of the economy, which will consequently have a negative effect on risk appetite and stock prices.

Morgan Stanley is recommending that investors focus on a portfolio of defensive stocks, primarily from industrial, energy and healthcare companies, as the market has not yet taken into account the risk of a recession in the US.

The bank previously cautioned that the American stock market could experience negative repercussions that could last through the autumn and potentially into the winter. It is estimated that the S&P 500 could finish the year close to 3,900, which is a decrease of approximately 13% from its current position.

Goldman Sachs predicts that the S&P 500 will close out the year at 4,500, which is nearly the same as its current position. The average prediction of the top 15 strategists on Wall Street is 4,372.

John Stoltzfus of Oppenheimer, Wall Street's most bullish strategist, has warned that the stock market is likely to decline further. He believes that the Federal Reserve is still unable to reach its inflation target, so investors should not be overly optimistic about a prolonged period of no rate hikes, let alone anticipate a rate cut.

Traders are wagering that the CBOE Volatility Index (VIX) will skyrocket by 1,100%, to 180, according to Bloomberg. This year, the VIX has not gone above 35, and since its inception in 1993, it has never even reached 100.