Brian Sozzi of Yahoo! Finance took time today to call out Goldman Sachs strategist David Kostin for the quick reversal in his predictions for the S&P 500. Sozzi wrote:
My oh my how a two-week long bear market rally and unprecedented stimulus actions by the Federal Reserve could change one’s thinking on stocks still dealing with the bruising coronavirus pandemic.
Somewhat under the radar on Monday, veteran Goldman Sachs strategist David Kostin said his “near-term downside” scenario for the S&P 500 of 2,000 is “no longer likely.” Kostin’s call was initially made on March 22, the day before the market hit its near-term bottom. Since the March 23 lows, the S&P 500 has rallied to the tune of 14%.
Kostin points to the Fed’s fresh $2.3 trillion in stimulus and a slowing in the coronavirus infection counts globally for his yanking of the S&P 500 2,000 call.
“If the U.S. does not experience a second surge in infections after the economy reopens, the “do whatever it takes” stance of policymakers means the equity market is unlikely to make new lows,” Kostin writes. “The Fed and Congress have precluded the prospect of a complete economic collapse. Reduced “left tail” risk translated into a higher P/E multiple.
Kostin continues to hold a yearend target on the S&P 500 of 3,000, representing potential upside from current levels of about 11%.