Goldman Sachs says The S&P 500 Will Remain Flat in 2023 With No Earnings Growth
According to the latest analyst from Goldman Sachs, the US economy is expected to grow at a slow rate of 1% during the next year. This analysis is based on the assumption that the US economy will manage to make a soft landing instead of a hard one.
So based on the growth rate of 1%, the S&P 500 index will slide by 10% before it makes a rebound and touches 4000 points. Basically, the S&P 500 will be in the same spot as it is today!
This scenario means that there will be no earnings growth for most of the US stocks. But what's even more alarming is that Goldman Sachs believes that it will be an optimistic scenario. They also said that it would depend on a valuation that's kind of stable.
But if the US economy goes through a hard landing, then the S&P 500 earnings would go down by around 11%. This equals around $200 per share in 2023, which will be against the baseline set by Goldman at $224. Another scenario related to the hard landing of the US economy means that the index will drop by 20%.
One thing to note here is that all of these are scenarios at best and not something that is set in stone. In reality, a lot can happen which can tilt this analysis in the positive or even a far worse direction.
If we look around, the analysts from Deutsche Bank believe that a mild recession in the USA will happen in 2023. They also said that the S&P 500 will rally to 4500 points during the first half of 2023. This will be followed by a 25% decline during Q3 of 2023. And once we near the end of 2023, it will get back to 4500 points.
Deutsche Bank also shared its forecast for the EPS of S&P 500 listed companies. They believe that the EPS will go from around $222 in the year 2022 to only $195 in the year 2023!