Analysts at Goldman Sachs do expect the US stock market to end the year higher than current levels (about 20% higher)
But caution (this snippet from the note):
- Strategically, we continue to expect the S&P 500 will rise to 3,000 by year's end
- Tactically, however, we believe it is likely that the market will turn lower in the coming weeks, and caution investors against chasing this rally
The note from Goldman Sachs is for their clients, but Market Watch have provided some detail from it if you want to check it out.
The three things to watch:
- The viral spread in the United States must begin to slow, so that the ultimate economic impact of the virus and containment efforts can be understood.
- There must be evidence that "extraordinary measures" taken by the Federal Reserve and Congress to support the U.S. economy are sufficient. While the willingness of policymakers to use all the tools at their disposal is clear, only time will tell to what extent the actions succeed in limiting defaults, [business] closures and layoffs
- Investor sentiment and positioning must bottom out. Goldman analysts point to their U.S. Equity Sentiment Indicator, which combines nine measures of equity positioning, noting that it has only declined by 1.4 standard deviations, versus standard deviations of between -2 and -3 in recent corrections.
