Goldman Sachs cuts its benchmark S&P 500 index target by 16% for 2022

Financial Newspaper – Santiago

Analysts at the investment bank indicated that the central bank’s expected rate path is now higher than its previous estimate.

Goldman Sachs cut its target for the benchmark S&P 500 index by the end of 2022 by around 16%, to 3,600 points.as the US Federal Reserve is showing little sign of backing down from its aggressive policy of raising interest rates.

Goldman Sachs analysts wrote in a note late on Thursday that the central bank’s expected rate path is now higher than its previous estimate. His previous target was 4,300 points and the S&P 500 index last closed at 3,758 points.

“Based on discussions with our clients, most equity investors have adopted the view that a hard landing scenario is inevitable and their focus is on the timing, magnitude and duration of a potential downturn and the investment strategies for that perspective,” wrote David Kostin, an analyst at Goldman.

The Fed said on Wednesday that global monetary policymakers “will continue” to strive to reduce inflation, raising rates by 75 basis points for the third time in a row, indicating that the cost of borrowing will continue to rise this year.

Kostin noted that inflation turned out to be more persistent than expected and is unlikely to show clear signs of easing in the short term, leading to further estimates of Fed tightening.

“Most portfolio managers believe that, to rein in inflation, the Fed will have to raise rates enough to trigger a US recession sometime in 2023,” he added.

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