Goldman Sachs sees S&P at 2,100 by year’s end after Fed stands pat

Analysts at Goldman Sachs expect the S&P 500 will climb to 2,100 by the end of this year, partly due to the Federal Reserve’s decision last week to keep interest rates at historically low levels.

“The no-hike decision eased financial conditions and supports S&P 500 SPX, +1.05% rising to 2,100 by year-end,” wrote the Goldman analysts in their “U.S. weekly kickstart” note.

The analysts — led by the bank’s chief U.S. equity strategist, David Kostin — are reiterating an S&P target that they detailed a month ago. The U.S. stock benchmark stands at 1,958 as of Friday’s close, down 4.9% for the year.

While the Goldman analysts are broadly rather bullish on U.S. stocks, they warn that stock picking could be difficult.

“Elevated uncertainty makes stock-picking more challenging, as equity correlations stay high and return dispersion remains low,” the note says. MarketWatch has reported that 65% of large-cap stock fund managers underperformed the S&P 500 in the 12 months ended June 30.

The latest Goldman note points out that the bank’s economists continue to predict that the Fed will raise interest rates in December.

Analysts at other banks aren’t necessarily backing their S&P target after the Fed’s decision. Deutsche Bank’s equity team, led by David Bianco, said in a note dated Friday that it sees the benchmark at 2,100 by year’s end. That’s the same as Goldman’s target, but down from Deutsche Bank’s prior target of 2,150.

Source: MarketWatch