Expect the stock market to be negatively impacted for the rest of the year by a variety of factors, including the vote by Britain to leave the European Union, the uncertainty of the current U.S. presidential campaign, and slow growth internationally, says Goldman Sachs, in a new note to clients.

David Kostin, head of the firm’s analyst team, predicts a year-end target for the S&P 500 of 2,100 — about where it is today — but that the interim will be a disappointment, according to a report by ETF Daily News. Kostin predicted a drop of up to 10% over the next few months, before stocks regain ground.

“Strategically, we expect a continuation of the range-bound market that has challenged investors for nearly two years,” ETF reported Kostin as saying in his memo to clients.

“Although investors appear complacent in the wake of Brexit, a maturing economic cycle with elevated valuations, decelerating buybacks, and growing political uncertainty provide the basis for potential market weakness in the second half.”

Kostin forecast that the S&P 500 will crater to the 1,850 level before improving. By year’s end, Kostin allowed that U.S. economic growth, slow earnings progress, and scanty investment alternatives internationally will serve to bolster equity prices “without providing a catalyst for further upside.”

“Despite Brexit we expect decent U.S. GDP growth of 2% in the second half of 2016,” Kostin is reported to have said. “Aside from negative risk sentiment, potential U.K. weakness should have a minor fundamental impact on the S&P 500 because Europe in aggregate contributes less than 10% of total S&P 500 revenues.”

According to Fortune, Goldman’s analysis noted that stocks are high by historical standards. “Only 6% of the time during the last 40 years has the median stock traded at a [price-to-earnings] multiple higher than it does today,” Fortune reported Kostin as saying in the research report.

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2 responses to “Goldman Sachs: Stocks Will Fall as Uncertainty Rises”

  1. Irrespective of BREXIT ,check the performance of the top 500 companies during the next quarter and decide the impact on growth.

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