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Goldman sees S&P 500 surging to 3,600 by end-2020

Goldman sees S&P 500 surging to 3,600 by end-2020

A Wall Street sign is seen in Lower Manhattan in New York, January 20, 2016. Wall Street moved deep into the red on Wednesday, with the S&P 500 hitting its lowest since February 2014 and extending this year's selloff as oil prices continued to plummet unabated. REUTERS/Mike Segar

REUTERS: A potential COVID-19 vaccine and bets of an economic rebound in 2021 will lift the S&P 500 to 3,600 by the end of the year, Goldman Sachs said, bumping its target for the index by 20per cent as it trades within striking distance of a record high.

The benchmark S&P 500 has surged 54per cent since a coronavirus-driven crash in March as investors piled into equities on the back of historic fiscal and monetary stimulus, but soaring unemployment and a deep economic recession have so far kept the index from reclaiming its all-time high.

With U.S. gross domestic product plunging at its steepest pace since the Great Depression in the second quarter, Goldman said investors were more focused on a recovery in 2021, when it expects GDP to rise by 6.4per cent and earnings for S&P 500 companies to jump 30per cent.

Analysts polled by Refinitiv expect earnings for the companies to rise 28.3per cent next year following a 20.3per cent plunge in 2020.

A part of the stock market jump will also be powered by lower "equity risk premiums", which are a combination of expected economic growth and investor confidence, as traders shrug off simmering U.S.-China tensions and uncertainties linked to the U.S. presidential elections in November, strategists at the Wall Street bank said.

(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel)

Source: Reuters

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