(Bloomberg) -- US equities are unlikely to slump 20% or more as the risk of a recession remains low against expected interest-rate cuts from the Federal Reserve, according to Goldman Sachs Group Inc. strategists.

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The team led by Christian Mueller-Glissmann said while stocks could decline into the year end — hurt by higher valuations, a mixed growth outlook and policy uncertainty — the odds of an outright bear market are slim as the economy is also in part being supported by a “healthy private sector.”

Moreover, a historical analysis by the strategists shows that declines of over 20% in the S&P 500 Index have become less frequent since the 1990s, driven by longer business cycles, lower macroeconomic volatility and “buffering” from central banks.

In a note dated Sept. 9, they said they remained tactically neutral in their asset allocation, but were “mildly pro-risk” over a 12-month horizon.

The S&P 500 has dropped from a record set in July as weak US economic data fueled worries about a recession. The benchmark is trading lower in September as investors await clarity on the Fed’s move next week.

Traders are pricing in rate cuts of more than 100 basis points by the end of 2024, according to swaps data.

Data from Citigroup Inc. showed a “bearish tilt” in investor positioning last week, leaving the main indexes susceptible to more declines over the short term.

--With assistance from Jan-Patrick Barnert.

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