The stock market is facing three challenges that could make a sharp decline more likely in 2025, according to Goldman Sachs.

Equities are priced for perfection with the S&P 500’s (SP500) rally in prices and having risen 23% last year after a 24% return in 2024, said Goldman Sachs. The rise in stock prices during the past two years has been in the 93rd percentile over same periods in the last 100 years,

Goldman Sachs issued a bleak warning on Thursday, cautioning that the stock market’s strong rally might not endure. Strategist Peter Oppenheimer noted in a client memo that equities are currently “priced for perfection,