Goldman cuts forecasts for S&P 500

If Goldman Sachs’s estimates end up being accurate, this would mean a drop of approximately 3 percent for the S&P 500, its first negative year since 2011.

“S&P 500 has made a adverse 4Q yield within only 22per cent along the last 65 years”. Still, the index is now down 8.5 percent from 2014’s close, and it would have to stage a strong fourth-quarter rally to meet that target, which would be the lowest annual increase for the index since 2011, when it ended almost unchanged. In addition to China’s economic slowdown, the investment bank also cited declining global oil prices for the downward projection in its revised prediction.

Slower growth in China and the US led investment bank Goldman Sachs to cut its S&P 500 forecast for the rest of 2015 to 2,000 from a price target of 2,100, Bloomberg reported.

That is below the median forecast of 2,202 in a June poll, with more than half of the strategists reducing their targets since then. For USA stocks, the July-September period is on track to be the S&P 500’s worst quarter in four years.

The options market is now pricing in a 7 percent chance that the S&P will fall another 10 percent over the next month.

And billionaire Carl Icahn released a super bearish video at midnight, outlining how the stock market is being supported by very fragile conditions including low rates. The bank cut its 2015 per-share earnings estimate by 4% to $109, down from $114 previously. Goldman also expects that the US central bank will raise its lending rates this year, most probably at the Federal Open Market Committee meeting in December.

“Between the spring of 2009 and the end of the year, the S&P was up 40 percent”. After being criticized all over the financial world, the Fed members have publically talked consistently about a rate hike this year, including the Fed Chair Janet Yellen herself.

Among sectors, a few analysts like financials, which are likely to benefit from a higher rate environment.