Goldman Sachs has cut its outlook for the S&P 500, and expects it to remain below 5,000 points this year, as rising inflation threatens to derail a budding recovery in the US economy.
The revised forecast of 4,900 points is almost a 4% drop from the previous estimate, but remains 11% higher than closing the index on Friday.
The key index has been under pressure since the beginning of the year, falling by 7.3%, due to a variety of concerns, from interest rate hikes to tensions in Ukraine, which made investors troubled and markets volatile.
“Uncertainty abounds about inflation and Fed policy,” say Goldman Sachs economists.
Consumer prices rose in January, at the highest rate in 40 years.
Goldman Sachs economists expect seven interest rate hikes in 2022, but at the same time they are seeing a rise in the US stock market as prices rise along with profits.
Goldman Sachs economist David Kostin said most of the increase in profits over the next two years would come from increased sales, with only a limited increase in net profit margin.
Source: Capital
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