Via a GS note from US equity strategists.
Goldman Sachs expects the S&P500 to be higher at year end, around 3,000. GS see the coronavirus scare receding and a rebound for the economy.
But, says the bank, the next 3 months will bring a near 20% decline, targeting around 2,400.
Says the decline could be triggered by a number of concerns and risks:
- Infection rates could increase outside worst-hit NY as states reopen their economies
- A drawn-out economic rebound
- Major US banks losing profits for loan-loss reserves … the labor market is now being hit harder and thus additional reserve will be required … more companies will cancel stock-buybacks (these have been aa major source of demand pushing the stockmarket higher over the past 10 years)
- Companies cutting dividend payments and also capex spending (which will slow corporate growth ahead)
- November presidential election policies (especially on corporate tax – Dems could reverse Trump’s corporate profit-friendly tax moves)
- US-China tensions being stoked further as Trump turns more aggressive in his China approach