The Stock Market Has Peaked and Will Remain Flat for the Rest of 2024, Goldman's Equity Chief Says - Latest Global News

The Stock Market Has Peaked and Will Remain Flat for the Rest of 2024, Goldman’s Equity Chief Says

A stock trader at work at the New York Stock Exchange on February 24, 2020.Johannes Eiselle/Getty Images

  • David Kostin, chief U.S. equity strategist at Goldman Sachs, says the S&P 500 could remain flat for the rest of the year.

  • He told Bloomberg TV that the index had already reached Goldman’s year-end target of 5,200.

  • The company’s indicators don’t suggest much more upside potential from current levels, although interest rate cuts could change that.

The stock market rally for 2024 has run its course as the S&P 500 is now above Goldman Sachs’ year-end forecast, said David Kostin, the company’s chief U.S. equity strategist.

In an interview with Bloomberg TV, he said there was no economic, valuation or earnings case for further upside, noting that money flow models also showed further gains were limited. The S&P 500 surpassed Goldman’s year-end target of 5,200 earlier this month.

That roughly suggests “a flat return from now until the end of the year,” Kostin said, leaving open the possibility of a change to the forecast if variables change.

Currently, Kostin’s team is forecasting real GDP growth of just under 3% and earnings growth of around 8%. Meanwhile, valuations are currently high and are unlikely to boost stocks further.

“They are almost 21 times earnings on an index basis. Therefore, the likelihood of multiple expansion is possible but less likely,” Kostin said. “The idea that the revenue will be much higher than we think is, in our opinion, quite low.”

Nevertheless, the Goldman stock boss is not completely giving up on the possibility of a bullish trend reversal. While this isn’t Goldman’s base case, there could be more upside if the Federal Reserve has to cut interest rates more dramatically than expected, he said.

So far, however, Goldman still believes two rate cuts are the most likely scenario for this year. Markets have stuck to similar forecasts, with the outlook little changed by Wednesday’s weaker-than-expected consumer price index.

“In fact, the base case scenario is that the market will trade at around this multiple level or even lower multiple towards the end of the year,” Kostin reiterated.

Others are a little more optimistic that the S&P can break out of its sideways trend this year. UBS, whose base forecast is also a target of 5,200, recently noted that 5,500 could be reached instead. Assuming the economy continues to lose inflation and the momentum in spending on artificial intelligence continues.

Read the original article on Business Insider

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