On Monday Eastern Time, Goldman Sachs released a market outlook report for 2024, stating that it is generally optimistic about the market and economic outlook for the next year. Goldman Sachs believes that after two years of volatility, the US stock market may avoid a bear market next year, and the US economy will also avoid a recession in the next 12 months.
Goldman Sachs analysts predict in their report that the S&P 500 index may hit 4700 points next year, which means it is about 8% higher than last Friday's closing price. Goldman Sachs strategists say that since 2022, the US stock market has been in a volatile range, meaning that despite intense market volatility, the overall trend has remained roughly flat.
The strategist at the bank stated, "Due to high interest rates for a long period of time, it is difficult for valuations to expand from now on. Our market forecast is basically consistent with earnings growth... On a weighted basis, we expect the global stock market price return to reach 8% next year, with a total return rate of 10%, bringing it close to the upper limit of the stable range it has been in since 2022
Goldman Sachs economists predict that the US economy will achieve a soft landing, the downward risk of the stock market is easing, deflation seems to be still on track, and bond yields will also fall from recent highs.
Although the US stock market is still susceptible to rising real interest rates, an optimistic macro outlook should help support the stock market and economic growth.
&Amp; Quot; In the absence of an economic recession, corporate profits typically rarely decline; Quot; However, lacking strong profit growth and high initial valuations (especially in the US stock market), as well as a lower stock risk premium (ERP), the overall outlook is not exciting compared to cash returns on a risk adjusted basis
In terms of industry performance in 2024, Goldman Sachs' view is that AI is not a foam, and profitable technology companies will continue to prove their value.
Choosing a balance between defensive, strong balance sheet growth, and selected deep value remains our preferred investment approach, "said Goldman Sachs researchers
In another report last week, Goldman Sachs strategist Jan Hatzius' team stated that they believe the likelihood of an economic recession in the next year is 15%. With the end of the era of ultra-low interest rates and sufficient liquidity, the market and global economy are returning to their pre 2008 state.
Overall, they expect real household income to increase, manufacturing activity to rebound, and central banks around the world to become increasingly willing to lower interest rates. With the end of the post crisis era, interest rates and investment returns will continue to normalize.