Wall Street giant Goldman Sachs says three tailwinds could act as bullish catalysts for global stocks, according to a Reuters report.
The Reuters report cites Goldman analysts saying in a note that positive corporate performance, as well as monetary and fiscal policies in the US and around the world, will boost stocks.
“We think that good earnings growth, Fed easing without a recession and global fiscal policy easing will continue to support equities.”
Goldman Sachs has consequently revised its rating for global stocks from “neutral” to “overweight” over the next three months. Goldman Sachs also lifted its forecast for the S&P 500 index to 6,800, about 14% above the current level of 6,704.
However, while Goldman Sachs is upgrading its forecast for global stocks, the report states that the Wall Street giant is downgrading its outlook on global credit from “neutral” to “underweight” for the next quarter, citing extended valuations as one reason.
In September, the global head of hedge fund coverage in Goldman Sachs’ global banking and markets division, Tony Pasquariello, said that stocks historically tend to do well when the monetary policy is easing and the markets are on an upward trajectory.
“And the history book is very clear, which is when the Fed is cutting, again, into a cyclical upswing, typically the outcomes are favorable. When the [Fed’s] cutting with the market on the [highs], typically, the markets fall through to the upside. And so, I mean, big ball, in the absence of recession, markets tend to go up. When the Fed is adding stimulus on top of that, again, typically the wind’s blowing in a favorable direction for the bulls.”
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