A Goldman Sachs logo is displayed on the floor of the New York Stock Exchange in New York City.
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Goldman Sachs Consumer and Wealth Management believes 2022 will be a big year for value stocks, while the broader S&P 500 index will see single-digit growth of 6.3%.
The New York-based giant is bullish on energy stocks and health stocks. We are also overweight in commodities and financial institutions, particularly in the eurozone. The company remains bullish on US stocks and pessimistic on poor cash and bond returns.
Goldman’s forecast S&P 500 return of 6.3% is more subdued than the robust 26.9% last year and 16.1% in 2020, but a number of uncertainties could weigh against stocks this year.
Head of Tactical Asset Allocation Brett Nelson told Forbes that his company sees an 85 percent chance the S&P 500 will climb 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 expects at least three rate hikes of 25 basis points, but is optimistic that higher valuations, partly justified by low rates, have room before major headwinds occur. Looking at historical data, Nelson told reporters that a rate hike of up to 5% would create a difficult environment with rates outperforming inflation and growth.
Goldman expects the year to end with 3.1% unemployment, below the current rate of 3.9%. They are also seeing a sizeable decline in inflation and expect a consumer price index of 3.4% in December 2022, significant deflation from the 7% rate last December.
Nelson has seen many of his company’s expectations of exceeding value growth sink in in the first few weeks of 2022 as tech and other growth stocks struggle and energy and other value companies outperform as the 10- Annual government bonds have risen rapidly in recent years. Month.