Home / Business and Economy / Near-Term Pain Expected for Stocks: Goldman
Near-Term Pain Expected for Stocks: Goldman
3 Mar
Summary
- Goldman Sachs traders observe oil price spikes may not harm S&P 500.
- US equities might need further declines before a lasting advance.
- Tax refunds may boost consumer spending and sentiment into spring.
Goldman Sachs' trading desk warns that US equities may require further declines before achieving a durable advance, citing fragile market sentiment and volatile trading flows. The S&P 500 recently struggled to surpass the 7,000 level.
Despite a significant surge in oil prices following Middle East tensions, historical analysis by Goldman's traders indicates that such spikes may have limited long-term damage to the S&P 500. Data since 2000 shows that while the index might experience an immediate selloff, subsequent one-month returns have often been positive.
Looking ahead, March presents seasonal headwinds, historically being a weaker month for the S&P 500, particularly the first half. However, performance tends to improve in the latter half of the month. Retail investor exuberance has waned compared to previous years amidst persistent volatility.
Corporate buybacks have provided some support, but this assistance is expected to diminish as a blackout window for repurchases approaches from mid-March through April. While companies have announced substantial buybacks, their cessation could amplify market weakness. Conversely, upcoming tax refunds are anticipated to support consumer spending and sentiment through spring.
