Goldman Sachs: S&P 500 growth target to drop to 3,600 by the end of the year

Investment bank Goldman Sachs lowered the target of the benchmark S&P 500 index at the end of this year from 4,300 to 3,600 points. The reason for this decision was a sharp change in the forecast of an interest rate increase in the United States, which will inevitably affect the valuation of stocks.

The bank's economists are inclined in favor of a negative scenario: due to the growing likelihood of a recession, the risks in the latest forecast are still shifted downward.

In particular, Goldman analysts envisage a 15-fold price-to-earnings ratio of the S&P index compared to the previous 18-fold. At the same time, it is predicted that the US Federal Reserve will again raise the discount rate by 75 basis points in November, then by 50 bps in December and by 25 bps in February at a peak of 4.5-4.75%.

In this scenario, corporate earnings will shrink, the yield gap will widen, and the benchmark stock index will fall to a minimum of 3150 points. The current value of the S&P 500 is 3.687.

However, the option of index growth is not excluded, but only if inflation finally goes down.