Original article about Goldman Sachs posted at cnbc.com
Goldman Sachs says several clients are asking what will happen to the stock market if trade tensions ease and economic growth stays strong.
- “We were surprised this week when several investors actually struck a different chord, positing optimistic scenarios relative to our starting forecast,” Goldman’s chief U.S. equity strategist David Kostin says.
- Under such a bullish scenario, Goldman’s estimate for S&P 500 2019 earnings per share would rise by 3 percent to $175 and a lower-than-expected Treasury yield would enable a market price to earnings multiple of 18 times. This would lead to a year-end price target for the S&P 500 of 3,150, 11 percent higher than Friday’s close.
Goldman Sachs predicts the markets will not move much into year-end, but some of the firm’s clients are saying the S&P 500 could rally sharply higher.
The firm said the second-quarter corporate earnings season was “stellar,” with 25 percent year-over-year earnings per share growth and a sales increase of 12 percent.
“The best earnings season since 2010 is now mostly behind us. Investors have quickly shifted their attention from past results to future prospects at both the micro and macro levels,” Goldman’s chief U.S. equity strategist David Kostin wrote Friday in a note entitled “The most out-of-consensus question we received: What if activity is better than everyone expects?”
“Investors remain concerned about trade and tariffs,” the note said, “However, we were surprised this week when several investors actually struck a different chord, positing optimistic scenarios relative to our starting forecast.”
Kostin reiterated his year-end price target of 2,850 for the S&P 500, representing 0.6 percent upside from Friday’s close.
Read entire article here: www.cnbc.com