Goldman Sachs Group analysts believe that a pessimistic outlook on the U.S. economy could actually result in bargain stock prices, thereby fuelling stock purchases. The outlook was dampened after the 10-year Treasury yield rose above 5% for the first time since 2007, thereby placing further pressure on the Federal Reserve to keep interest rates higher for longer.
“Although we expect headwinds to discount rates and balance sheets to persist, we would view a substantial further downgrade to the growth outlook as a buying opportunity,” Goldman Sachs strategists wrote.
The team of analysts is expecting the S&P 500 to end 2023 at 4,500, slightly outpacing the 4,370 average expected among analysts tracked by Bloomberg. The index closed at 4,117.37 on Friday, down 10% from its 2023 peak reach in late July of 4,567.46.