Stocks: 'The bear market is not over,' according to Goldman Sachs

The feel good vibes in the markets this holiday season may be coming to an end, warns Goldman Sachs.

"The bear market is not over, in our view," closely followed Goldman Sachs strategist Peter Oppenheimer wrote in a new note. "The conditions that are typically consistent with an equity trough have not yet been reached. We would expect lower valuations (consistent with recessionary outcomes), a trough in the momentum of growth deterioration, and a peak in interest rates before a sustained recovery begins."

Oppenheimer last warned in early September that stocks were not out of the woods. After Oppenheimer's call, the S&P 500 (^GSPC) went onto touch a fresh low for the year in mid-October on the back of rising interest rates and still high inflation readings.

"The recent rebound in equities is not the first we have seen in this bear market," the note stated. "In our view, the speed of the rise in interest rates (rather than their absolute level) has the potential to do more damage as investors are likely to increasingly focus on growth and earnings weakness."

Many investors have been trying hard to put thoughts of bear markets in the rearview mirror.

Amid signs of an easing in inflation and a renewed drop in the U.S. dollar, stocks have rallied since those aforementioned October lows. In the past month alone, the Dow Jones Industrial Average (^DJI) is up 10.6% and the S&P 500 has gained 6.6%.

But Oppenheimer warns the hope is likely to fade, and soon.

"We continue to think that the near-term path for equity markets is likely to be volatile and down before reaching a final trough in 2023," Oppenheimer added. "So while near-term risks are to the downside in global equities, it is likely that they enter a 'Hope' phase in 2023; we expect overall returns between now and the end of next year to be relatively low."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

Read the latest financial and business news from Yahoo Finance

Download the Yahoo Finance app for Apple or Android

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and YouTube