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The S&P 500 will still hit 3,600 by year end despite the recent tech-sell off, Goldman Sachs said on Friday.
A team led by David Kostin, said: “We still expect the market will rise to 3600 at year-end 2020 and 3800 at mid-year 2021 driven by improving earnings prospects and a declining risk premium.”
Superforecasters at the Good Judgement are betting on a 68% of a probability of having a widely distributed vaccine by Q1 2021, up 40% compared to three weeks ago.
The bank first said S&P 500 would hit 3,600 by year end last month but a recent tech sell-off brought into question whether stocks may tip lower.
The bank also said a vaccine would likely increase EPS estimates, “particularly for cyclicals.”
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The S&P 500 will still reach 3,600 by year end despite a recent stock market sell-off, Goldman Sachs said Friday.
In a note, analysts led by David Kostin said the S&P 500 is expected to be 3,600 by the end of this year, and 3,800 by mid 2021, supported by hopes a vaccine will be widely distributed by the first quarter of 2021.
The S&P 500 closed just shy of 3,341 on Friday. But the index has lost 5% since touching an all-time high of 3,520.25 at the end of August.
A sell-off in big tech firms like Tesla caused the index to also close 2.5% lower last week, marking its largest weekly fall in three months.
“Despite the sharp sell-off in the past week, we remain optimistic about the path of the US equity market in coming months. The Superforecaster probability of a mass-distributed vaccine by 1Q 2021 has surged to nearly 70% and economic data show a continuing recovery,” Goldman Sachs said.
The bank added while earnings estimates have “stalled” in the past month, progress on a vaccine will boost forecasts.
Goldman is by far the most bullish investment bank on Wall Street. It predicted last month the index would hit 3,600 if markets price in a “comparatively more optimistic US GDP forecast.”
The bank on Friday upgraded its third quarter US GDP forecast to an expansion of 35% after a stronger than expected August jobs report.
“We still expect the market will rise to 3600 at year-end 2020 (+8%) and 3800 at mid-year 2021 (+14%) driven by improving earnings prospects and a declining risk premium,” Goldman said.
But Goldman said despite this week’s “setback in one clinical trial”, superforecasters at the Good Judgement are betting on a 68% probability of mass-distributed vaccine by 1Q 2021, up from 40% three weeks ago.
Anglo-Swedish pharma group AstraZeneca resumed its vaccine trial with Oxford University this weekend after it was forced to halt the trial last week when one of its participants fell ill.
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Source:: Business Insider