According to Reuters, Goldman Sachs sees more modest returns for the S&P 500 in 2022, reflecting “decelerating economic growth, a tightening Fed, and rising real yields.”
Also built into the mid-November forecast from Goldman was a forecast for net income per share for S&P 500 companies “to grow 8% to $226 in 2022.” At the time, Goldman’s outlook for 2022 S&P 500 equity returns was in the 9% range.
In contrast, around the same time, Reuters reported that “Morgan Stanley analysts see the S&P 500 moving lower in 2022, with equity markets more volatile as earnings growth slows, bond yields climb and companies try to manage supply chain disruptions and higher input costs.”
Both of these analyst notes were issued before the late-November news on the emergence of the omicron variant of COVID—and the news from the final Federal Reserve meeting of 2021—so the outlooks appear subject to possible revisions.
More recently, FactSet published its comprehensive preview for 2022 S&P 500 earnings and provided this overall summary statement:
Financial Advisor Magazine recently published a cautionary perspective authored by Jim O’Neill, a former chair of Goldman Sachs Asset Management and a former UK treasury minister. He writes,
Estimates from three major banks on 2022 U.S. GDP growth are in a very tight range, according to Yahoo Finance, which reported the following on Dec. 8, 2021:
- Goldman Sachs, in a post-omicron note as of Dec. 4, cut its 2022 GDP estimate from 4.2% to 3.8%.
- Bank of America called for 2022 GDP growth of 4.0%, in an estimate issued on Nov. 21.
- Wells Fargo, in a forecast issued on Nov. 12 and reiterated in December, also looked for 2022 GDP growth in the 4% area.
On Nov. 10, The Conference Board provided this perspective on 2022 growth:
It should be noted, as Bank of America pointed out in its forecast, that 2022 GDP growth in the 4% range would be above the pre-COVID trend seen in 2019.
Sources: Trading Economics, U.S. Bureau of Economic Analysis
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