U.S. investment bank Goldman Sachs (NYSE:GS) says stocks have bottomed.
In a new note to clients, Goldman Sachs Group Inc. says stocks are unlikely to make new lows because of ongoing stimulus measures from policy makers. The bank says a combination of policy support and a flattening viral curve has "dramatically cut risks to both markets and the American economy." If the U.S. doesn’t have a second surge in infections after the economy reopens, equity markets are unlikely to fall again and reach new lows.
"The Fed and Congress have precluded the prospect of a complete economic collapse," the Goldman strategists wrote. "These policy actions mean our previous near-term downside of 2,000 is no longer likely” for the S&P 500 Index. The U.S. benchmark closed last week around the 2,790 level, having hit a three-year low of 2,237 on March 23.
Goldman cited policy measures including rate cuts, the Federal Reserve’s Commercial Paper Funding Facility and fiscal stimulus such as the $2 trillion U.S. CARES act among the “numerous and increasingly powerful” actions that have spurred equity investors.
Goldman Sachs said it also expect investors to look past first-quarter results from the upcoming earnings season and focus instead on the outlook for 2021.
