A fresh selloff could hit Wall Street as soon as this week, with Goldman Sachs’ Panic Index signaling markets are near “max fear” despite Friday’s rally.
Analysts at Goldman’s trading desk estimate that as much as $33 billion of selling could hit US equities this week, telling investors that they need to “buckle up,” according to Bloomberg News.
If the S&P 500 falls below 6,707, an additional $80 billion could be shed over the next month, Goldman analysts estimated.
Investor stress surged last week, with Goldman’s Panic Index — which combines measures including one-month S&P implied volatility and VIX volatility — climbing to 9.22, a level signaling markets are approaching “max fear.”
The jump reflects investors paying up for downside protection in options markets as they brace for larger and more frequent price swings, even after last week’s rebound.
Such elevated volatility conditions often coincide with price moves that trigger selling by Commodity Trading Advisers, or CTAs — systematic, trend-following funds that adjust exposure based on market momentum rather than fundamentals.
The S&P 500 has already breached short-term thresholds that set off CTA selling, and Goldman expects those funds to remain net sellers in the days ahead, regardless of whether stocks rise or fall, according to Bloomberg News.
“Big shifts in views take months and quarters to develop, not days. So stay zoomed out to avoid overtrading,” said Dean Lyulkin, founder of The Dean’s List, urging investors not to overreact to recent market volatility.
Lyulkin pointed to strength beyond technology stocks, saying that “while tech is down, causing the S&P 500 to trade at a loss, the majority of our counterbalance themes are showcasing their strength.”
He told The Post that foreign stocks, US small caps “and the equal weight S&P 500 are all doing well,” while noting that “the commodity component of our portfolio strategy is doing poorly as crypto falls in concert with risk assets and tech,” even as the Fed held rates steady and the economy is on “firm footing.”
US stocks ended last week on a strong note after a volatile stretch, with the S&P 500 jumping about 2% on Friday in its biggest one-day gain since May.
The rebound helped the index claw back much of its midweek losses, though it still finished below recent highs after sharp declines earlier in the week driven by a selloff in technology shares and renewed volatility across risk assets.
Friday’s rally was widely viewed as a relief bounce rather than a shift in underlying market conditions, driven largely by dip-buying after a bruising, tech-led selloff earlier in the week.
Investors reassessed fears about AI-driven disruption and heavy Big Tech spending, with some judging the pullback as overdone, while the rebound reflected a technical reset and short covering rather than a new macro catalyst.
