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The stock market has peaked and will remain flat for the rest of 2024, Goldman’s equity chief says

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

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

  • He told Bloomberg TV that the index has already reached Goldman’s final target of 5,200.

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

The stock market rally for 2024 is over, with the S&P 500 now above Goldman Sachs’ year-end forecast, according to David Kostin, the firm’s chief U.S. equity strategist.

In an interview with Bloomberg TV, he said there is no economic, valuation or earnings argument for further upside, noting that money flow models also show that further gains will be capped. The S&P 500 surpassed Goldman’s final target of 5,200 earlier this month.

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

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

“At index level, they are almost 21 times larger than profits. The chance of a multiple expansion is therefore possible, but less likely,” says Kostin. “The idea that revenues are much greater than we think is quite low.”

Still, the Goldman stock chief isn’t completely giving up on the possibility of a bullish reversal. While not Goldman’s base case, more upside potential could emerge if the Federal Reserve has to cut rates more dramatically than anticipated, he said.

But so far, Goldman still sees two cuts as the most likely scenario for this year. Markets have maintained similar expectations, with the outlook little changed by Wednesday’s lower-than-expected consumer price index.

“The base case is basically that the market will trade around this price level, or even lower, as we approach the end of the year,” Kostin reiterated.

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Others are more optimistic that the S&P can emerge from a flat run this year. UBS, which also has a target of 5,200 as its base projection, recently noted that a target of 5,500 could be achieved instead. That’s if the economy continues to decline and momentum for artificial intelligence continues to increase.

Read the original article on Business Insider

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