The strong start to 2021 for the U.S. stock market renewed fears about sky-high valuations, but economic variables suggest that investors don’t have much reason to worry about a major pullback, according to Goldman Sachs.
The investment firm’s economics research analysts said in a note last week that low interest rates, improving labor markets and not-yet-surging inflation meant that current equity valuations seemed reasonable.
“We find that unusually low bond yields, low inflation and a rapidly improving labor market are conditions that should be associated with unusually high valuations,” the note last week said.
