Goldman's economists expect a Minumum of One COVID-19 vaccine will probably be approved by the end of the season
The S&P 500 will rise yet another 7 percent this year for a COVID-19 vaccine can help the U.S. market outperform expectations, according to Goldman Sachs.
The company thinks S&P 500 earnings will be boosted by a sharp rally in earnings and expanding profit margins since the market recovers and investor confidence gains momentum.
"A decreasing equity risk premium will outweigh a rise in bond yields and united with all our above-consensus EPS prediction, will raise the S&P 500 indicator to 3,600 by year-end (+7percent )," composed a Goldman team headed by Chief U.S. Equity Strategist David Kostin, that had a former goal of 3,000.
The S&P 500 has become positive territory for the year, up 4.4percent through Friday, following the COVID-19 pandemic triggered a 34% dip from the 23 trading days after the Feb. 19 record large.
The S&P 500's comeback was encouraged by the Federal Reserve cutting interest rates to near zero and unprecedented stimulation on both the monetary and fiscal policy fronts created to encourage the market through the pandemic. The company thinks that the Fed's balance sheet will grow by another $800 billion annually and another $1.3 trillion in 2021.
Goldman's economists expect a minumum of one COVID-19 vaccine will probably be accepted by the end of the calendar year, placing the U.S. market on track to increase 6.4percent in 2021, better than the 3.9% increase anticipated by the consensus. Kostin sees the S&P 500 reaching 3,800 within the subsequent 12 months.
Though the 2020 election remains a"significant threat" into Goldman's prediction -- a Biden win may lead to greater corporate tax rates -- that the virus stays front and centre.
"The most significant risk to our forecast is that the time of a vaccine and route of retrieval in the pandemic," Kostin wrote.