AsianFin -- Goldman Sachs has signaled that the stock market’s recent rally could be at risk of a sharp reversal.

In a note to clients, the investment bank highlighted its equity asymmetry framework — a tool that evaluates stocks based on prevailing market conditions and the latest economic data — which is now indicating a notable increase in the likelihood of a market decline.

According to the model, the S&P 500 faces more than a 10% chance of a drawdown over the next three months and over a 20% chance of a drawdown within the next 12 months.

Goldman noted that this surge in drawdown risk mirrors a similar pattern seen earlier this year. At that time, the equity asymmetry framework flagged elevated risk shortly before President Donald Trump announced a series of tariffs on April 2, triggering a historic sell-off in the market.

The bank’s analysis suggests investors should remain cautious as market conditions could become more volatile in the near term.