Here’s What Goldman Sachs Is Expecting For Markets And The Economy In 2022

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The consumer and wealth management arm of Goldman Sachs believes 2022 will be a big year for value stocks, while the broader S&P 500 index will see single-digit gains of 6.3%.

The New York giant is bullish on energy stocks and healthcare stocks. It is also overweight commodities and financial institutions, especially in the Eurozone. The firm remains bullish on US equities and bearish on unexpected cash and bond returns.

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Goldman’s projected 6.3% S&P 500 return is more muted than last year’s strong 26.9% and 2020 levels of 16.1%, but a number of uncertainties could be working against stocks this year.

Brett Nelson, Head of Strategic Asset Allocation Businesshala That his firm sees an 85% chance of the S&P 500 moving higher in 2022, with the Covid-19 pandemic at the center of uncertainty.

The Fed’s monetary policy is also being closely monitored. Goldman Sachs forecasts at least three interest rate hikes of 25 basis points, but is optimistic that higher valuations, which are partially justified by lower rates, have room to move before facing major headwinds. Is. Looking at historical data, Nelson told reporters that if rates rise to 5%, it will present a challenging environment with inflation and interest outstripping growth.

Goldman expects the year to end with unemployment at 3.1%, which is well below the current rate of 3.9%. They expect a major reduction in inflation, with consumer price index expectations at 3.4% for December 2022, a notable deflation rate of 7% from last December.

Nelson sees his firm’s expectations of growth outperform in the first few weeks of 2022, as technology stocks and other growth stocks struggle, and energy and other value firms outperform, while 10-year Treasuries rise sharply. happened. Month.

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