Photographer: Michael Nagle / Bloomberg
Photographer: Michael Nagle / Bloomberg
Goldman Sachs Group Inc. is the latest company to increase its price for the S&P 500 by the end of the year, as an ongoing rally of the lows of March leaves strategic predictions in the dust.
David Kostin raised his forecast for the US gauge benchmark to 3,600 from 3,000, joining the likes of Yardeni Research founder Ed Yardeni and Lori Calvasina of RBC Capital Markets who have been raising their forecasts in recent weeks. The rally has taken many investors by surprise, with the S&P 500 now sitting at 3,372.85 – a 51% discount to its March lows – and threatening to break the February closing record. Kostin quoted Goldman’s above-consensus U.S. expectations about growth in the U.S. dragging down positive news on the fax front.
“As recent months have shown, stock prices depend not only on the expected future stream of income, but on the rate at which that income is discounted to present value,” Kostin wrote in a note Friday. “Looking ahead, a falling stock price premium will be heavier than a rise in bond yields, and combined with our above consensus EPS forecast, the S&P 500 index will lift after the end of the year.”
See the forecasts of the end of the strategists for the S&P 500, with effect from mid-July, here.
Major stimulus injections have boosted the climb in the S&P 500 since the March sell-off sparked by the pandemic. The gauge went over a whole lot last week, helped by better-than-expected data on economic and income, and optimism about an early roll out of a fax machine.
Kostin said the U.S. election remains a significant risk to his prediction due to challenges in table results in Covid-19 times, although “the biggest risk to our prognosis is the timing of a vaccine and path of recovery from the pandemic,” he said. hy.
JPMorgan Chase & Co. strategies led by Mislav Matejka on Monday also reiterated their preference for US equities, urging clients to remain Bullish despite strong gains and impending US election risks.
Their main reasons? Analysts say that U.S. sectoral exposure to growth and defensive stocks will help it outperform other developed markets, and that U.S. profit growth is likely to beat that of Europe.
– With the help of Adam Haigh
(Updates with JPMorgan strategy in the last two paragraphs)
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