Goldman Sachs trims forecast for S&P 500, expects rate hike in December
On Tuesday Goldman Sachs trimmed its year-end forecast for the S&P 500, referring to a combination of the slower pace of economic activity in China and the U.S. and a drop in oil prices.
The year-end
price forecast for the S&P was cut by 5 percent to 2,000. The bank had previously expected the index to rise to 2,100 by the end of 2015.
Goldman also said it expected the U.S. Federal Reserve to
start hiking interest rates in December.
At the meeting earlier this month, the bank left rates
unchanged at record lows and voiced worries over the health of the global economy.
The S&P 500 has shed about 8.5 percent this year compared with a fall of about 10 percent in the blue-chip Dow Jones industrial average and a 4 percent decline in the tech-heavy Nasdaq.
Goldman said it forecast the U.S. economy
to expand 2.4 percent in 2016, down from a previous estimate of 2.8
percent.
It also reduced its estimate for global growth outside the U.S., to 3.7 percent from 4.3 percent.
"Our baseline forecast is that the U.S. economy will grow at a modest pace, earnings will rise, and the S&P 500 index will climb slowly while the P/E multiple declines as interest rates rise," Goldman said.
