Goldman Sachs analysts believe 2016 will have pretty much nothing to offer investors.
In fact, the firms’ strategists forecast the year to end right about where it began, with the S&P 500 stuck at 2,100 amid a morass of higher interest rates, the end of margin expansion and a “bifurcated” market through which participants will have to tread carefully.
“We forecast the S&P 500 index will tread water for a second consecutive year in 2016,” Goldman said in a report for clients this week. “In many ways our 2016 forecast is ‘deja vu all over again.'”
The weak market will come amid little growth in fundamentals, with gross domestic product projected to increase just 2.2 percent in both 2016 and 2017 and a 10 percent rise in corporate profits but a plateau in margins at 9.1 percent. Goldman said the increase in profits will be “misleading” in part because of a reversal in this year’s earnings story. Much easier comparables in energy, which is expected to decline 58 percent for the full year, will inflate the 2016 picture.