Goldman Sachs says investors are being complacent about recession risks as the stock market rallies

The risk of a recession is being downplayed by investors, according to analysts at Goldman.

In recent weeks, investors have bet that slowing economic growth will cause central banks to hold off on raising interest rates.

Technology stocks were particularly strong in July, with the S&P 500 jumping more than 9%.

Goldman's analysts called for caution in a note on Monday.

They wrote that the market might have been too cautious when it came to anticipating a more accommodative monetary policy stance.

In an effort to avoid a damaging recession, many investors are betting that the US Federal Reserve will stop hiking rates in a few years.

Weak economic data has been the driving force behind those bets. They have caused bond yields to fall and boosted the stock market, which has fallen sharply this year.

Goldman is worried that investors' hopes could be overstated.

Markets are vulnerable, according to Mariotti and colleagues. If inflation continues to rise, the central banks will have to keep hiking interest rates, or if growth slows more dramatically than expected.

The S&P 500 is expected to be around 4,000 in three months, which is 3% below Monday's closing level.

The index is expected to reach 4,300 in six months and 4,500 in a year's time.

There are 10 cheap stocks that are not exposed to a potential US recession that should be snapped up by investors.