Goldman Sachs Revises Its Gloomy Outlook On Markets Following Sharp Rebound In Stocks

Goldman Sachs Group Inc. GS has given up its forecast of a sharp downturn in U.S. stocks.

What Happened

Goldman strategist David Kostin and his team are having to revise their prediction of a 500 point slump on the S&P 500 to 2,400 levels. This forecast was a sharp 20% decline from the levels recorded on Friday’s closing of 3,044.

The strategists now see the downside capped at 2,750 and claim a rally to 3,200 levels is a possibility, reported Bloomberg.

“The powerful rebound means our previous three-month target of 2,400 is unlikely to be realized,” the Goldman strategists forecast. “Monetary and fiscal policy support limit likely downside to roughly 10%. Investor positioning has oscillated between neutral and low and is a possible 5% upside catalyst.”

Why It Matters

The shift in Goldman’s stance comes after JPMorgan Chase & Co. JPM strategist Marko Kolanovic revised his previously bullish stance citing geopolitical concerns.

Goldman predicts S&P500 to reach 3,000 levels and says the conditions are still pointing to the downside “or neutral at best” due to economic risks as well as a possible trade or political “hiccup.”

Meanwhile, the S&P500 has returned 36% from its March 23 lows spurred by government stimulus measures, monetary support, and optimism surrounding economies getting back to business, according to Goldman. 

GS Price Action

On Friday, Goldman Sachs shares closed 1.74% lower at $196.49.