S&P 500 Index: Risks skewed to the upside in medium-term – Goldman Sachs

In its latest client note, Goldman Sachs analysts offer a constructive outlook for the S&P 500 index, citing a strong recovery in global earnings growth and lower cost of equity.

Key quotes

“Potential for “broader procyclical shift” in stocks, other assets to year end.”

“Still prefer "growth vs. value on a strategic horizon, but:

In the near term, elevated uncertainty on US elections and a better global growth outlook might benefit non-US equities more.”

“In the medium term a large weight in structural growth stocks is likely to support the S&P 500.”

“Near term risks include the when and how a coronavirus vaccine will be deployed:

• Diminishing US fiscal support.
• US election uncertainty.
• Rising COVID-19 cases.
• Oil price volatility.”

“The S&P 500’s falls were not due to any large pick-up in growth optimism but to further declines in real yields.”