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Investing.com -- Trading desks at major financial firms are recommending clients purchase inexpensive hedges against potential stock market losses as multiple risks threaten the current record-setting rally.
Goldman Sachs Group (NYSE:GS) and Citadel Securities are among the firms advising clients to secure protection while costs remain low. The S&P 500 Index has surged 28% since April 8, while Wall Street’s fear gauge has fallen to its lowest level since February.
"If you are nervous, the market is making it very easy to rent hedges," Goldman’s trading desk wrote in a note to clients on Monday.
The cost of protection against a 10% decline over the next month in an ETF tracking the S&P 500 versus a 10% gain has reached its lowest level since January.
Some analysts remain optimistic about continued market strength. Scott Rubner from Citadel Securities indicated retail traders could provide support for the rally. Tully suggested that if the Fed determines tariffs aren’t driving inflation or hindering economic growth, a September rate cut might fuel further gains.
JPMorgan Chase (NYSE:JPM)’s Ilan Benhamou recommended clients buy put options expiring August 1 to protect against potential market declines following the tariff deadline and jobs report.
Rubner advised investors to secure September-expiring hedges against macroeconomic events, noting historical data since 1928 shows September has been the worst-performing month for US equities.
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