Bridgewater Associates LP has bet more than $1 billion that stock markets around the world will fall by March, said people familiar with the matter.

The wager, assembled over a span of months and executed by a handful of Wall Street firms, including Goldman Sachs Group Inc. and Morgan Stanley, would pay off for the world’s biggest hedge fund if either the S&P 500 or the Euro Stoxx 50—or both—declines, some of the people said.

It...