S&P 500: Next 3 months will bring a near 20% decline to 2,400 – Goldman Sachs

Here is the article.

Here are my highlights:

1. 20% decline from SPX 2900 to 2400 in May to September;
2. Major US banks losing profits for loan-loss reserves
3. Labor market is being hit harder
4. Companies cut dividend payments and also CAPEX (?) spending 

Goldman Sachs recently came out with its analysis on the leading US equity benchmark, S&P 500. While the bank anticipates the equity gauge to rise further towards 3,000 by the year-end, it also expects a near 20% declines to around 2,400 in the three-months to come.

Some of the risks cited in the report are:

• Infection rates could increase outside worst-hit NY as states reopen their economies.
• A drawn-out economic rebound.
• Major US banks losing profits for loan-loss reserves … the labor market is now being hit harder and thus additional reserve will be required … more companies will cancel stock-buybacks (these have been a major source of demand pushing the stock market higher over the past 10 years).
• Companies cutting dividend payments and also CAPEX spending (which will slow corporate growth ahead).
• November presidential election policies (especially on corporate tax - Dems could reverse Trump's corporate profit-friendly tax moves).
• US-China tensions being stoked further as Trump turns more aggressive in his China approach.

It’s worth mentioning that the S&P 500 managed a gain of less than a point to end Monday’s trading session near 2,930.