New Record Highs Again By End Of 2020

Despite the recent market sell-off, rising optimism about a coronavirus vaccine and progress with reopening the economy should propel stocks back to record highs before the end of the year, according to a recent note from Goldman Sachs.

 

Goldman raised its year-end target for the S&P 500 to 3,600, implying a 6% upside from Monday’s close of around 3,383.

 

“Despite the sharp sell-off in the past week, we remain optimistic about the path of the U.S. equity market in coming months,” David Kostin, Goldman’s head of U.S. equity strategy, said in a note on Monday.

 

The S&P 500 is now attempting to rebound from its first two-week losing streak since May, which was sparked by a sharp sell-off in high-flying technology stocks that pushed the Nasdaq Composite into correction territory, falling 10% in just three days of trading.

 

Goldman called the recent sell-off a “warp speed correction,” noting that reasons for optimism—mainly progress on a coronavirus vaccine and economic reopening—still remain intact.

 

The firm, citing the rising “probability of a near-term vaccine,” predicts that the S&P 500 will rise further to 3,800 by mid-year 2021—implying around a 10% gain from its current level.

 

With the likelihood of a coronavirus vaccine by the first quarter of 2021 “rising sharply,” Goldman forecasts GDP growth of 6% in 2021, which is well above the Wall Street consensus of 3.9%.

 

“Although earnings revisions have stalled in the past month, we expect further reopening and vaccine progress will catalyze another move higher in estimates,” Kostin said.

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