Goldman Sachs has observed two issues arising in the stock market.
One is the issue of higher interest rates that may result in lower valuations. All else being equal, the S&P 500 has the potential to reach 4,700, if the interest rates remain relatively unchanged till the end of the year.
Advertisement
The second is tax reform which comes at a point where Congress is negotiating a potential for higher corporate taxes and higher capital gains rates. If that happens, investors may see hits to capital gains and corporate profits and stocks could face selling pressure.
If the current tax policies persist, the forecast is S&P 500 earnings per share to rise 10% in 2022.