According to the Zhito Finance APP, as of the week ending April 25, the US stock market saw significant gains driven by familiar upward trends in Large Cap Technology Stocks. However, Tony Pasquariello, the global head of Goldman Sachs' hedge fund business, stated that investors should prepare for continued volatility, as the market is currently at the midpoint of the 2025 trading Range.

In a client report on April 26, Pasquariello wrote that the S&P 500 Index is currently less than 3% fully recovered from the sell-off post what President Trump called the "Day of Liberation", and the volatility as measured by the VIX Index has decreased by more than half from recent highs. Meanwhile, he stated, "We are still 11% lower than the highs in February, and the trading environment remains extremely unstable."

As Wall Street enters a critical phase of earnings reports for Technology Stocks and the highly anticipated employment reports, Pasquariello warned that investors are facing one of the most intense shifts in market narratives since the 2008-09 financial crisis.

He stated, "Since 2009, American exceptionalism has been a decisive theme in the financial sector." This theme formed slowly and accelerated during the COVID-19 pandemic, arguably peaking at the World Economic Forum Annual Meeting held in Davos, Switzerland, from January 20 to 24 earlier this year.

"But the past few months have constituted a completely opposite situation," he noted.

Turbulent daily news.

Pasquariello pointed out that the daily news flow remains highly volatile, with the market reacting strongly to signals regarding USA-China relations and Federal Reserve policies. He stated that recent developments are at the "second derivative" stage, with trade policies leaning hawkish but avoiding extreme outcomes.

Amidst the noise,Technical Indicatorsit has become more optimistic. "For the first time in two months, technical factors have turned net positive," he wrote, noting that both proprietary trading funds and systematic funds had "essentially cleared their positions" before turning to Buy last week.

The continued selling pressure from pure bullish investors seems to have paused as they have bought Stocks of large Technology companies like NVIDIA and Meta Platforms.

However, on the fundamental side, Pasquariello stated that he remains cautious: "Currently, the main task for market participants is to weigh the probability of a situation downgrade against the probability of an economic recession. It will take time to gain confidence in the true trajectory of USA economic growth unless there is a comprehensive easing on tariff issues."

He expected that the daily "spike up/down" price movements will continue, and only the fastest and most agile traders can profit from it. He warned that in practice, "buying the dip and selling the rally is very difficult."

Overvaluation.

Pasquariello re-examined the tricky issue of valuation. Despite recent adverse factors, the forward PE of the S&P 500 remains around 20 times, and most market participants believe this level is unsustainable.

However, he urged clients to consider another possibility: "What if the market is not wrong?" He said that to justify the current valuation, investors need to believe in a combination of tariff rollbacks, continued leadership in USA technology, and the resilience of the economic structure.

Goldman Sachs emphasized that since 1947, American household services consumer spending has only declined for two consecutive quarters four times, highlighting its deep-rooted stability.

Looking ahead, attention will focus on the earnings reports of large cap technology stocks. Pasquariello stated that giants such as Meta, Microsoft, Alphabet, or Amazon have not abandoned their ambitious capital expenditure plans when announcing fourth-quarter results. "As we head into next week, I believe the entire market will be highly focused on the commitment of mega-cap companies to sustain this battle," especially in the context of the accelerating competition in AI.

During his recent field visit, Pasquariello observed that there is widespread strategic uncertainty among American companies, but emphasized not to overlook the resilience and innovative capacity of the USA.

He also pointed out several additional areas of concern for investors: the risk of foreign capital selling off USA stocks, signals from the number of first-time unemployment claims, the weakness of the dollar, and the relatively strong performance of the Japan stock market. As he summarized: "The biggest question that needs to be answered now is, where is the best place for capital?"