‘Goldie’ Sees S&P 500 at 3,400 in Here

‘Goldie’ Sees S&P 500 at 3,400 in Here

$DIA, $SPY, $QQQ, $RUTX, $VXX

Goldman Sachs Group (NYSE:GS) says a Fed interest-rate cut will continue to boost stock prices this year.

The bank cut Y 2019 earnings estimates for the S&P 500 Index to 167 a share from 173, citing an economic slowdown, lower Crude Oil prices and weak margins, according to a note Tuesday from a team led by David Kostin.

At the same time, the group raised its year-end price target by 100 pts to 3,100, implying a 3% gainer for the equity benchmark in the final 5 months of the year.

The S&P 500 surpassed Goldman’s prior year-end target early in July as investors grew confident the Fed will dial back interest rates in an effort to extend the longest economic recovery on record.

Tuesday’s move aligns Mr. Kostin and his team with a growing Wall Street consensus predicting a slowdown in corporate profit that will not dent the stock market.

Mr. Kostin’s team cited the Fed as one reason for their more optimistic view on the stock market.

While corporate profit growth has slowed in 1-H of Y 2019, investors remain more willing to pay up for equities as the Fed prepares to cut rates for the 1st time in a decade.

The S&P 500 has rallied 20% this year, and by Goldman’s count, more than 90% of the gainers come from an expansion in PER’s (price-earnings ratio).

“The dovish Fed pivot has driven the equity market rally in 2019, and we expect low interest rates will continue to support above-average valuations going forward,” Mr. Kostin wrote.

Equity valuations will keep growing to support the market next year, the team said. They lowered their Y 2020 profit forecast to 177 a share from 181 while initiating a price target of 3,400. That represents roughly a 13% increase from the S&P 500’s close Tuesday.

Tuesday, the major US stock market indexes finished at: DJIA -23.33 at 27198.02, NAS Comp -19.71 at 8273.62, S&P 500 -7.79 at 3013.18

Volume: Trade on the NYSE came in at 776-M/shares exchanged

  • NAS Comp +24.7% YTD
  • S&P 500 +20.2% YTD
  • Russell 2000 +17.6% YTD
  • DJIA +16.6% YTD

HeffX-LTN overall technical outlook for the major US stock market indexes is Bullish in here.

Stay tuned…

GS, DIA, SPY, QQQ, RUTX, VXX, DJIA, stocks, earnings, bullish, market, indexes, profits, valuations, Fed, interest, rate, cuts,

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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