Goldman Sachs Warns $80 Billion in Forced Selling Could Still Hit U.S. Stocks

Goldman Sachs is warning that the recent sell-off in U.S. equities may not be finished, even after last week’s sharp rebound, as systematic trend-following funds continue to trigger automatic selling signals.

Despite the powerful rally on February 6 that pushed the Dow Jones Industrial Average above 50,000 for the first time, Goldman’s trading desk notes that Commodity Trading Advisors (CTAs) have already crossed short-term sell thresholds. Once these models flip, selling can persist regardless of near-term price moves.

CTA Models Point to Forced Selling

According to Goldman Sachs, CTA positioning suggests sizable equity supply could still hit the market:

• Feb 9–13: If markets resume falling, CTAs could sell around $33 billion in U.S. equities.
• Next month: Total systematic selling may reach $80 billion if the S&P 500 drops below the key medium-term trigger at 6,707.
• Flat market scenario: Even without further downside, models imply about $15.4 billion in selling this week as positions reset.

These flows are mechanical, meaning they are driven by volatility and trend signals rather than discretionary views on fundamentals.

Key Levels and Market Stress

The S&P 500 ended the week at 6,932.30, not far from its worst weekly performance since October. Strategists are now focused on 6,707, which Goldman describes as a “danger zone” where systematic de-risking could accelerate.

The initial weakness was sparked by a rotation out of AI-heavy technology stocks after the release of a new legal AI tool by Anthropic, which raised concerns about competitive disruption. At the same time, retail participation showed signs of strain, with roughly $690 million in net selling last week, particularly across crypto-linked equities.

Short-Term Pressure vs. Longer-Term Optimism

While Goldman’s trading desk remains cautious in the near term due to CTA-driven pressure, the bank’s Asset Management team is more constructive beyond the current adjustment.

Goldman Sachs Global Investment Research continues to project a 7,600 year-end target for the S&P 500, implying roughly 12% total return for 2026. That outlook is supported by expectations of 2.6% U.S. GDP growth and potential Federal Reserve rate cuts later in the year.

For now, however, the message from Goldman is clear: even strong rallies may struggle to gain traction until systematic selling pressure fully runs its course.

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