In a note to clients on Wednesday, Goldman Sachs analysts speculated that their 6,000 S&P 500 price target may actually be “too low,” signaling even more bullish sentiment for U.S. stocks as the year.
According to Goldman Sachs, they expect a strong rally to begin on October 28, despite the current short-term market turmoil.
However, the short-term outlook is more cautious. Goldman Sachs is warning of heightened volatility over the next three weeks, predicting the market will react strongly to daily headlines.
The bank wrote that it is “preparing for additional volatility and the market will be over-traded with daily headlines and themes.”
Analysts point to a significant drop in the S&P 500 gamma index, which is down $14 billion, the biggest change in its data set.
This suggests that the market has more freedom of movement and, according to Goldman, could lead to a downward bias in the short term.
Despite these near-term concerns, Goldman Sachs remains bullish on the year-end outlook. It points to strong systematic exposure, with institutional investors and hedge funds heavily invested.
However, the blackout window for corporate buybacks until October 25 means that a key driver of market support will be temporarily absent.
“American companies are in a blackout window until October 25th. The biggest buyer of US stocks in 2024 may buy 35% fewer stocks during the closed window,” explains Goldman Sachs.
Once that window closes, Goldman expects repurchases to continue strongly in November and December, supporting further gains.
In addition, analysts see increasing demand for Chinese stocks, stressing that “this time is different” and pointing to increased daily demand from investors.
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Reference;
Boughedda, S. (2024) Goldman Sachs says its 6000 price target of the S&P 500 may be ‘too low’ By Investing.com, Investing.com. Investing.com. Available at: https://www.investing.com/news/stock-market-news/goldman-sachs-says-its-6000-price-target-of-the-sp-500-may-be-too-low-3645230 (Accessed: 2 October 2024).
