Goldman Sachs Group strategist David Kostin Pointed out for U.S. Stocks

Goldman Sachs Group strategist David Kostin pointed out that his target point for U.S. stocks faces downside risks, joining a series of Wall Street analysts who have become more pessimistic about U.S. stocks.

Kostin said in a note on Monday that he “appears to be skewed to the downside” after reassessing his year-end forecast for the S&P 500 at 5,100. At the same time, Morgan Stanley = strategist Michael Wilson, who has always been known for being bearish on U.S. stocks, also increased his bet today, and U.S. stocks are expected to retreat further.

Wilson wrote in a note that last week’s big swings “are classic bear market behavior.” “We still think it’s time to sell on rallies and think tactically the fair value of the S&P 500 is still close to 4,000,” he noted.

While a drop to 4,000 — about 10 percent from Friday’s close — is not Goldman’s Kostin’s core forecast scenario, he wrote in a Monday note that if U.S. Treasury real yields rise 60 basis points to 0 percent , it may fall to this point.

The S&P 500 rebounded on Friday, posting its first weekly gain this year after a rollercoaster of volatility. The prospect of higher interest rates, slowing economic growth and geopolitical tensions combined, and the index is still down 7% so far in 2022, lagging European and emerging market equities. S&P 500 futures edged lower on Monday.

Of the 23 strategists surveyed this month, Morgan Stanley’s Wilson had the lowest expectations for his year-end S&P 500 target. While the index is now near its year-end forecast of 4,400, the strategist expects the index to fall a further 10% from current levels as the Fed tightens policy more aggressively and earnings growth slows.

Meanwhile, Kostin’s 5,100 target is in the middle of the 23 strategists surveyed. However, he wrote in a note on Monday that risks are mounting, including the possibility of four rate hikes this year — two when Goldman Sachs first released its 2022 forecast — and a mixed earnings season so far.

But both analysts agree that the best strategy in the current market is to focus on quality stocks. “We recommend investors focus on high-quality stocks and the potential upside for energy stocks from oil prices,” Kostin wrote.

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Goldman Sachs Group strategist David Kostin pointed out that his target point for U.S. stocks faces downside risks, joining a series of Wall Street analysts who have become more pessimistic about U.S. stocks.

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