Tony Pasquariello from Goldman Sachs believes that the current market lacks appeal.

Goldman Sachs’ Tony Pasquariello believes the stock market’s recent surge has made it less attractive. The S&P 500 ended an eight-day winning streak on Tuesday, pausing its recovery from a turbulent start to August. Pasquariello, who oversees hedge fund client coverage at Goldman, noted that the unexpected strength in corporate and retail buying after recent market volatility might limit further gains. For instance, Nvidia’s stock has risen over 40% since its low on August 5, while the S&P 500 has climbed about 9% from its low on the same day, which was its worst session since 2022 amid a global market downturn. Speaking to CNBC’s “Closing Bell,” Pasquariello remarked that the current risk/reward scenario in the market isn’t very enticing, given the significant progress made in the past week or so.

He also pointed out that the outlook for large-cap tech stocks, particularly the “Magnificent Seven,” will be more challenging compared to the previous year. Although these stocks still have a compelling narrative, their performance is expected to diversify. Pasquariello mentioned that the extraordinary earnings results seen in the past 18 months are less striking now. Even if the “Magnificent Seven” achieve 18% earnings growth next year, along with buybacks and capital expenditures, the setup remains more demanding.

Despite these challenges, Pasquariello maintains a positive view on stocks overall. He believes that stronger-than-expected earnings growth, robust GDP growth, and the initiation of interest rate cuts will support the equity market.