Goldman Sachs (GS) is predicting a lackluster end to stocks this year, but next year’s forecasts are looking much brighter. The investment bank lowered its year-end forecast for the broad S&P 500 to 2,000 from 2,100. That equates to a 3 percent year-over-year drop. Though it expects the index to rise to 2,100 by the end of 2016. ‘Slower economic growth in the U.S. and China and a lower oil price than we previously assumed translate into a reduced profit forecast and a lower trajectory for U.S. stocks,’ the analysts wrote in a Tuesday note. But that’s still a bullish call, given today’s levels. ‘One of the reasons why we could see a year-end rally is because the biggest buyers of stocks are the companies themselves,’ said Kevin Kelly, chief investment officer of Greenwich, Conn.-based Recon Capital Partners. ‘Heading into this earnings season, they haven’t been able to buy their own stocks, so they’re going to throw in the kitchen sink – the market is volatile – and buy their own stock going into the end of the year.’ Not to mention the ‘santa claus’ rally that tends to show up during the last week of the year, largely driven by institutional investors. Kelly agrees with Goldman’s rosy 2016 forecast. ‘With the S&P 500, you’re talking about the top names across the globe that have the best balance sheets and these names are a better alternative in a low interest rate environment.’
Subscribe to TheStreetTV on YouTube:
For more content from TheStreet visit:
Check out all our videos:
Follow TheStreet on Twitter:
Like TheStreet on Facebook:
Follow TheStreet on LinkedIn:
Follow TheStreet on Google+:
source
