LONDON: High valuations and one of the strongest recoveries from a bear market in history have left equities vulnerable to a correction but the recent fall is not indicative that markets have reached "danger zone" levels yet, Goldman Sachs said in a note.

"While it has not reached danger zone levels that typically precede a bear market (a fall of at least 20%), it has reached levels which have typically been consistent with corrections and relatively low returns over the next one and five years," the US investment bank said on Wednesday.

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US stocks fell on Tuesday, notching up losses of nearly 9% so far this month as uncertainties surrounding an increasingly hawkish Federal Reserve and rising geopolitical tensions prompted investors to dump high flying tech shares.

Goldman Sachs said markets are in a correction phase within a bull market cycle and current levels signify relatively low returns over the next one to five years.