Zero Hedge was quoting it this morning, I have sent you the article
Goldman Sachs Cuts S&P 500 Earnings Estimate on Economy, Dollar
2015-07-01 12:55:50.575 GMT
By Inyoung Hwang
(Bloomberg) -- Slower economic growth, a stronger U.S.
dollar and a collapse in earnings at energy producers spurred
Goldman Sachs Group Inc. to cut its estimate for U.S. profits by
6.6 percent.
The New York-based firm now sees 2015 earnings by Standard
& Poor’s 500 Index companies at $114 a share, after predicting
$122 in October. Goldman Sachs maintained its forecast for the
benchmark gauge ending the year at 2,100, up 1.8 percent from
Tuesday’s close, according to a note dated June 30.
Sales will fall in 2015 for the first time in five years as
margins slip and revenue by energy companies declines, Goldman
Sachs predicts. At the same time, the bank expects the Federal
Reserve to delay an interest-rate increase until December rather
than September, helping prop up equity valuations.
“S&P 500 P/E, which is historically rich, will stay
elevated through the remainder of 2015, but will compress when
the Fed starts its tightening cycle in December,” a Goldman
Sachs team led by strategists Amanda Sneider and David Kostin
wrote in the report.
The firm noted that S&P 500’s price-earnings multiple
declined by 8 percent on average in the three months after the
last three initial rate increases.
Speculation about higher interest rates and Greek turmoil
sent the S&P 500 2.1 percent lower in June, the biggest monthly
drop since January. The gauge trades at 17.5 times estimate
profits, near the high reached in April.
More Conservative
Sneider and Kostin are more conservative in their stock
forecasts than other Wall Street strategists. The S&P 500 will
finish the year at 2,232, according to average estimates by 21
analysts compiled by Bloomberg.
The dollar has strengthened more than the Goldman Sachs
team anticipated, according to the note. As central banks in
Europe and Japan continue to ease policy while the Fed prepares
to boost rates for the first time since 2006, the U.S. currency
may jump 11 percent this year, making the nation’s exporters
less competitive, according to the note. About 33 percent of
sales at S&P 500 members are generated overseas, the bank said.
Earnings at S&P 500 companies will climb 11 percent to $126
a share next year and 7 percent to $134 in 2017, according to
Goldman Sachs. Dividends will rise 9 percent this year, it said.
Sales in the energy sector will shrink by 32 percent this
year, dragging down overall revenue for the S&P 500, according
to Goldman Sachs. The firm also trimmed its forecast for energy-
company earnings to $5 a share from $13.
Goldman Sachs also cut its profit projection for technology
companies by $2 a share, citing lower economic growth and
currency risk. For those, the percentage of sales that come from
abroad is almost double that of the broader S&P 500, according
to the bank.
For Related News and Information:
Strategists’ S&P 500 Index Estimates for Year-End 2015 (Table)
Developed Markets View: DMMV <GO>
World Stock Indexes: WEI <GO>
Stoxx 600 Market Map: SXXP <Index> IMAP <GO>
Top Stories on Stocks: TOP STK <GO>
Equity Screening: EQS <GO>
Graphing: GRAPH <GO>
Feature Stories on Stocks: TNI STK GREET <GO>
--With assistance from Gaurav Panchal in London.
To contact the reporter on this story:
Inyoung Hwang in London at +44-20-3525-2394 or
ihwang7@bloomberg.net
To contact the editors responsible for this story:
Cecile Vannucci at +44-20-3525-7032 or
cvannucci1@bloomberg.net
Alan Soughley
2015-07-01 12:55:50.575 GMT
By Inyoung Hwang
(Bloomberg) -- Slower economic growth, a stronger U.S.
dollar and a collapse in earnings at energy producers spurred
Goldman Sachs Group Inc. to cut its estimate for U.S. profits by
6.6 percent.
The New York-based firm now sees 2015 earnings by Standard
& Poor’s 500 Index companies at $114 a share, after predicting
$122 in October. Goldman Sachs maintained its forecast for the
benchmark gauge ending the year at 2,100, up 1.8 percent from
Tuesday’s close, according to a note dated June 30.
Sales will fall in 2015 for the first time in five years as
margins slip and revenue by energy companies declines, Goldman
Sachs predicts. At the same time, the bank expects the Federal
Reserve to delay an interest-rate increase until December rather
than September, helping prop up equity valuations.
“S&P 500 P/E, which is historically rich, will stay
elevated through the remainder of 2015, but will compress when
the Fed starts its tightening cycle in December,” a Goldman
Sachs team led by strategists Amanda Sneider and David Kostin
wrote in the report.
The firm noted that S&P 500’s price-earnings multiple
declined by 8 percent on average in the three months after the
last three initial rate increases.
Speculation about higher interest rates and Greek turmoil
sent the S&P 500 2.1 percent lower in June, the biggest monthly
drop since January. The gauge trades at 17.5 times estimate
profits, near the high reached in April.
More Conservative
Sneider and Kostin are more conservative in their stock
forecasts than other Wall Street strategists. The S&P 500 will
finish the year at 2,232, according to average estimates by 21
analysts compiled by Bloomberg.
The dollar has strengthened more than the Goldman Sachs
team anticipated, according to the note. As central banks in
Europe and Japan continue to ease policy while the Fed prepares
to boost rates for the first time since 2006, the U.S. currency
may jump 11 percent this year, making the nation’s exporters
less competitive, according to the note. About 33 percent of
sales at S&P 500 members are generated overseas, the bank said.
Earnings at S&P 500 companies will climb 11 percent to $126
a share next year and 7 percent to $134 in 2017, according to
Goldman Sachs. Dividends will rise 9 percent this year, it said.
Sales in the energy sector will shrink by 32 percent this
year, dragging down overall revenue for the S&P 500, according
to Goldman Sachs. The firm also trimmed its forecast for energy-
company earnings to $5 a share from $13.
Goldman Sachs also cut its profit projection for technology
companies by $2 a share, citing lower economic growth and
currency risk. For those, the percentage of sales that come from
abroad is almost double that of the broader S&P 500, according
to the bank.
For Related News and Information:
Strategists’ S&P 500 Index Estimates for Year-End 2015 (Table)
Developed Markets View: DMMV <GO>
World Stock Indexes: WEI <GO>
Stoxx 600 Market Map: SXXP <Index> IMAP <GO>
Top Stories on Stocks: TOP STK <GO>
Equity Screening: EQS <GO>
Graphing: GRAPH <GO>
Feature Stories on Stocks: TNI STK GREET <GO>
--With assistance from Gaurav Panchal in London.
To contact the reporter on this story:
Inyoung Hwang in London at +44-20-3525-2394 or
ihwang7@bloomberg.net
To contact the editors responsible for this story:
Cecile Vannucci at +44-20-3525-7032 or
cvannucci1@bloomberg.net
Alan Soughley