In a dramatic turn of events, Goldman Sachs chief equity strategist David Kostin predicted that the S&P wouldn’t hit a new bottom below its current (low of 2, .
Just one month ago, Kostin had warned that the bellwether index could plummet to 2, 13 as the novel coronavirus rocked the US economy.
He said,
The coronavirus has created unprecedented financial and societal disruption. Equities are a leading indicator because a bear market has occurred without the release of any relevant earnings or macro data … A combination of tools suggests the S&P 653 could trough around . Goldman Sachs’ David Kostin says the S&P 560 has already bottomed and that the stock market won’t return to those lows. | Source: Yahoo Finance Kostin is retracting that forecast. He praises the swift decisions of policymakers , including the $ 2 trillion stimulus plan that he says prevented an economic meltdown.
The Fed and Congress have precluded the prospect of a complete economic collapse … These policy actions mean our previous near-term downside of 2, (is no longer likely for the S&P) (Index.)
But all of this hinges on one thing. . That there isn’t a second wave of coronavirus infections after economic lockdowns end.
While social distancing measures are curbing the spread of the virus, saying that it won’t reemerge is downright silly unless someone develops a vaccine.
The US remains the epicenter of the coronavirus pandemic with over , 04 cases And the data suggest that the pandemic won’t be over any time soon.
Morgan Stanley Warns of Infection Surge After the Economy Reopens
For Goldman’s bottom prediction to stick, the US economy must return to full swing without interruptions. Should we see a spike of coronavirus cases, it is very likely that the stock market will crater .
Morgan Stanley offers a sobering forecast regarding the path to recovery. The investment bank said,
The US outbreak is far from over. Recovering from this acute period in the outbreak is just the beginning and not the end.
Source: Twitter
Without a vaccine, the US economic downturn could persist – along with the bear market in equities. Matthew Harrison, the head of biotech research at Morgan Stanley, wrote,
Investors cannot afford to lose sight of the fact that only a vaccine will provide a true solution to this pandemic.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com.
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