Stock market ‘mauled’ by a bear market sees Goldman Sachs cut forecasts

The bears are coming out of hibernation at white glove investment bank Goldman Sachs.

Goldman Chief U.S. Equity Strategist David Kostin slashed his year end S&P 500 target to 4,300 from 4,700 in a new note to clients, stating that investors have been “mauled by a 18% near-bear market plunge since the index peaked on January 3rd.” The index ended Friday’s session at 4,023.89.

Kostin added that the cut reflects “higher interest rates and slower economic growth than we previously assumed.”

A recession would push the S&P 500 down to 3,600, Kostin warned. The chance of a recession in 2023 stands at 35% within two years, Goldman’s team reiterated.

Kostin’s call comes as the S&P 500 notched its sixth straight week of declines. Large chunks of the markets are in bear territory, notably once hot tech names Netflix, Meta, and Amazon.

Markets looked set to open in the red on Monday as traders digest recession fears and lackluster growth data from China.

Also not helping market sentiment is fresh bearish talk by Kostin’s colleagues.

Goldman Chief Economist Jan Hatzius reduced his second quarter GDP estimate to 2.5% from 2.9% over the weekend.

“Alternative data indicate a slowdown in consumer spending in late April and early May—perhaps in response to tighter financial conditions and higher consumer prices,” Hatzius said in a new note.

Former Goldman CEO Lloyd Blankfein, meanwhile, became the first top bank executive to publicly warn of a recession, telling “Face the Nation” that there is a “very, very high risk” of a recession.

“If I were running a big company, I would be very prepared for it,” Blankfein noted, suggesting stock prices have further to fall in a recession scenario. “If I was a consumer, I’d be prepared for it. But it’s not baked in the cake.”

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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