How Much Farther Will the S&P 500 Drop? Much Lower, Goldman Sachs Says. By Connor Smith Updated March 16, 2020 6:04 pm ET / Original March 16, 2020 5:57 pm ET A screen shows a graph before the opening bell at the New York Stock Exchange (NYSE) on March 16, 2020 at Wall Street in New York City. Photograph by Johannes Eisele/AFP via Getty Images The S&P 500 index on Monday had its worst trading day since 1987, down 12% from Friday’s close. The market benchmark, which closed at 3386.15 less than a month ago on Feb. 19, ended the session down to just 2386.13. A team of strategists at Goldman Sachs thinks the index will end the year at 3200—but they see a bottom at 2000 along the way. “The coronavirus has created unprecedented financial and societal disruption,” Goldman Sachs strategist David Kostin and colleagues wrote in a note Friday. “We have cut our EPS [earnings-per-share] forecast twice in two weeks. Every investor asks ‘What is the floor for stocks?'” S&P 500 IndexSource: FactSetAs of March 17, 10:27 a.m. ET Sept. 30Oct. 28Nov. 25Dec. 23Jan. 20Feb. 17March 16225025002750300032503500 That’s tough to say, given how volatile the market has been, they say. Counting Monday, the Dow Jones Industrial Average saw its third-straight move of 9% or more—something that hasn’t happened since October 1929. But based on their estimates that take into account the Federal Reserve model, a Dividend Discount Model, and history, their model predicts a mid-year trough of 2000 for the S&P 500 index. On a more positive note, the Goldman Sachs team points out event-driven bear markets often bring out sharp rebounds. The strategists expect the S&P 500 index to end the year at 3200—a hair lower than where it was at the end of 2019. “The lesson of prior event-driven bear markets is that financial devastation ultimately allows a new bull market to be born,” they wrote. “Consider the one-month decline of 19% sparked by the 1998 Russian sovereign debt default that was followed by a 28% rally during the subsequent six months. Or the 19% drop in 2011 during the Eurozone debt crisis that was followed by a 29% rebound in six months.” They still expect S&P 500 earnings per share will decline by 5% to $157, which assumes supply chain disruption, weak U.S. and global consumption, and lower oil prices and interest rates than previously anticipated. They expect the earnings decline to be mostly in the second quarter and third quarter, until EPS rebounds by 12% in the fourth quarter and increases11% in 2021 to $175. https://www.barrons.com/articles/austerity-economics-wont-cure-the-coronavirus-51583766588
There will be a rally up point at 2000 but the eventual bottom should be around 1400 or so. How about that "backhanded angle shot" to the GS half of the court !!
Nothing about trusting anyone, the simple fact apart from insider trading and HFT, no one really knows shit. Trade accordingly.
RedDuke Nothing about trusting anyone, the simple fact apart from insider trading and HFT, no one really knows shit. Trade accordingly. ______________ Interestingly you are both right.
Those Morgan Stanley guys were bitching about how lofty the market was sometime before the Coronavirus collapse. They're now turning bullish.
I posted this another day. Treat it as one of those pointless predictions: 2316 (December 2018 low) is definitely in the card. But the ULTIMATE LOW in my most humble opinion is the 2008 top at 1580. I mean that's where the past 11 years of bull run started. So it makes sense to circle back to the origin. FYI A drop to 1580 from the ATH is slightly above 50%, not a whole lot considering that previous bear markets tumbled up to nearly 80%. We shall see.