The analysts of Goldman Sachs issued a grim warning to the financial market, raising the possibility of a disastrous scenario in which the technology giants could not meet expectations, lor that it would trigger a massive 14% drop in the markets this year.
Despite this negative forecast, Goldman Sachs managed to keep its main prediction for the S&P 500 unchanged at 5,200 points, indicating a more modest 1% drop over the course of the year.
However, it is important to highlight that recently the Bank of America team, led by Savita Subramanian, quantitative and equity strategistraised its target for the S&P 500 from 5,000 to 5,400 points earlier this month, offering a more optimistic view amid market uncertainty.
It is worth remembering that since January, The S&P 500 has seen an impressive increase of more than 10%, and last week it broke the barrier set by Goldman Sachs of 5,200 points for the end of the yeara feat that has left many investors reflecting on the future, according to Goldman Sachs strategists in a note cited by CNN.
New S&P 500 record in sight
Led by David Kostin, chief U.S. equity strategist at Goldman Sachs, analysts have outlined a scenario that could further push the S&P 500 up to 6,000 points by the end of the yearan additional 15% increase, driven primarily by the continued growth of large-cap technology stocks.
Unlike previous episodess, investors are paying sharper attention to actual business fundamentals rather than getting carried away by the market’s irrational exuberance.
Despite the current fervor for artificial intelligence, Goldman Sachs analysts say that growth expectations and valuations for major technology, media and telecom stocks are “far from being considered a bubble.”
The possibility of any of these scenarios, according to analysts, is intrinsically linked to the Federal Reserve’s future policy decisions. Investors are worried that the central bank could keep interest rates at high levels for a longer period due to to persistently high inflation rates.
“For the market recovery to be consolidated, a change in the outlook on interest rates is necessary without the economy suffering any deterioration,” the analysts point out.
Additionally, analysts presented a worst-case scenario, in which top tech stocks could fail to live up to expectations, leading to a 14% market decline this year.
For now, Goldman Sachs is keeping its 5,200 baseline prediction for the S&P 500 unchanged, suggesting a decline of about 1% this year.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
