Goldman Sachs Slashes S&P 500 Year-End Target On Higher Fed Rates

Goldman Sachs Group has cut its year-end target for the S&P 500 Index to 3,600 from 4,300.

The U.S banking giant stated that higher interest rates will weigh on valuations for US equities.

Goldman’s economists “now forecast the FOMC will raise the policy rate by 75 bp in November, 50 bp in December, and 25 bp in February for a peak funds rate of 4.5%-4.75%.”

Federal Reserve Chair Jerome Powell has signaled that he would risk a recession to fight inflation.

Also, majority of equity investors have adopted the view that a hard landing scenario is inevitable.

The S&P 500 has underperformed the Stoxx Europe 600 Index since Sept. 12.

Goldman’s new base-case target implies a 4.2% drop in the US equity benchmark from Thursday’s close. It forecasts 6-month and 12-month targets for the gauge at 3,600 and 4,000, respectively.

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