Goldman and Morgan Stanley say stocks do n’t completely reflect pitfalls // stock markets share market today stock market stock market news

 Goldman and Morgan Stanley say stocks do n’t completely reflect pitfalls 

 

 

 Goldman Sachs GroupInc. strategists led by DavidJ. Kostin said that US earnings estimates are still too high and anticipate them to be revised down indeed further. 

 

 Indeed after this time’s rapid-fire selloff, equities are still not completely reflecting the vast pitfalls facing commercial earnings and weaker consumer demand, according to strategists at Morgan Stanley and Goldman Sachs Group Inc. 

“ The Equity Risk Premium doesn't reflect the pitfalls to growth, which are adding due to periphery pressure and weaker demand as the consumer decides to hunch down, ” Morgan Stanley strategists led by Michael Wilson wrote in a note on Monday. 

 

 

 Depressed consumer sentiment is a crucial threat to the US stock request and frugality as the Federal Reserve is set to keep fighting surging affectation with rate hikes, he wrote. Meanwhile, Goldman Sachs GroupInc. strategists led by DavidJ. Kostin said that US earnings estimates are still too high and anticipate them to be revised down indeed further. 

Despite this time’s selloff in the S&P 500, “ equity valuations remain far from depressed, ” Kostin wrote in a note. The unexpectedly strong affectation data show “ that the Fed’s battle with affectation has put a ceiling on equity valuations. ” 

 

 US affectation accelerated to a fresh 40- time high in May, while consumer sentiment plunged in early June to the smallest in data back to 1978. Stocks vended off on Friday and US futures gestured the S&P 500 may near a bear request again moment on investor fears the rearmost affectation numbers will probably push the Federal Reserve to extend an aggressive series of interest- rate hikes into the fall. 

“ The drop in sentiment not only poses a threat to the frugality and request from a demand viewpoint, but it also, coupled with Friday’s CPI print, keeps the Fed on a hawkish path to fight affectation, ” said Wilson. 

 

 

 Wilson has been among Wall Street’s most prominent bears and rightly prognosticated the rearmost request selloff. While Morgan Stanley strategists said that periphery pressure and waning consumer demand dynamics have been priced in by the request, the threat of redundant force is just now beginning to be reflected in stock prices. They reiterated their light on consumer optional shares. 

 Wilson sees points, or about 13 lower from Friday’s close, as a “ more dependable position of support ” for the S&P 500 bymid-to-late August if a recession is avoided, which accounts for earnings 3 to 5 lower than agreement, a 10- time Treasury yield at 3 and an equity threat decoration at 370 base points. 

 

 Goldman’s base case is that equity valuations will remain roughly flat, while earnings growth will boost the S&P 500 to by time- end, or about 10 advanced than current situations.