Goldman Sachs expects the S&P 500's annual return to be just 3% over the next decade, down from 13% in the last decade.
Goldman Sachs' equity strategy team expects the S&P 500 to deliver little return over the next decade given today's high concentration on a few stocks and high starting valuation.
The broad market index would produce an annual nominal total return of just 3% over the next 10 years, according to the team led by David Kostin, which would rank just in the seventh percentile of 10-year returns since 1930. But these projections are much lower than that. Goldman pointed to the booming gains from last year, with the S&P 500 returning 13% annually over the past 10 years, higher than the long-term average of 11%.
The broad market index has gained nearly 23% year to date.
For more on Goldman's bearish long-term outlook, read here.
-John Milloy, Piya Singh
Stocks open lower on Monday
Dallas Fed President Logan supports lowering interest rates “gradually.”
Dallas Fed President Lori Logan speaks at the National Association for Business Economics conference in Dallas, Texas, US, October 9, 2023.
Anne Saphir | Reuters
Dallas Fed President Lori Logan said Monday she supports the current move to lower interest rates but warned that a patient approach will be needed.
“If the economy develops as I currently expect, a strategy of gradually reducing interest rates towards a more normal or neutral level could help manage risks and achieve our goals,” Logan said in remarks delivered in New York. “However, any number of shocks could affect what that path to normal will look like, how quickly policy should move and where interest rates should settle. In my view, the (Federal Open Market Committee) will need to To remain nimble and willing to adapt if appropriate.”
Along with her views on interest rates, Logan also supported reducing the Fed's bond portfolio, and said the two processes – easing interest rates while reducing the balance sheet – were not inconsistent with the “normalization” of monetary policy.
– Jeff Cox
Boeing and Humana are among the stocks making pre-market moves
Some stocks make big moves in pre-market trading:
Boeing – Shares rose 3.3% after the planemaker and its machinists union reached a new contract proposal that could end a month-long strike. A vote on ratifying the proposal, which includes a 35% pay increase, is expected to take place on Wednesday. Warby Parker – The eyewear retailer advanced nearly 5% following Goldman Sachs' upgrade to buy from neutral. Goldman said the company could outperform as fundamentals improve and margins grow stronger. According to Bloomberg sources, the talks are in the early stages. Humana stock rose more than 4% while Cigna stock fell by the same amount.
Read here for the full list.
— Sean Conlon
Bernstein cuts price target for ASML, still expects 13% upside
The normalization of Chinese demand may pose a threat in the near term ASMLaccording to Bernstein.
The company reiterated its outperform rating on Dutch semiconductor stocks, but lowered its price target to $815 from $1,052. The revised price forecast remains roughly 13% higher than where ASML shares closed on Friday.
ASML stock is down 4% this year. Analyst Sarah Russo believes investors have unfairly punished the stock.
ASML chart YTD
“The recent downgrade has been even more pronounced compared to history, with ASML now trading at a low of 1SD below the historical average, which we believe is overdone,” she said. “ASML is now trading at a discount to SOX, which we find undeserved given our belief that the structural story remains strong.”
While the company recently lowered its 2025 guidance after a “transitional” year of 2024, Rousseau wrote that the normalization of Chinese demand may mean investors still “need to be patient until the cyclical recovery becomes clearer.”
“We had concerns about the risk of a longer-term recovery in final demand leading to a delay in capacity expansion, and that is where we now appear to be headed in 2025,” she wrote.
On the bright side, Russo said she is modeling the stock's recovery in 2026.
-Lisa Kailai Han
Loop Capital upgrades JD shares to Buy from Hold
You see the capital ring JD.com As a potential beneficiary of China's recently announced stimulus initiatives.
The company upgraded shares of the Chinese e-commerce retailer to buy from hold. Analyst Rob Sanderson raised his price target to $49 from $48, which equates to an upside of about 23%.
JD will announce its third-quarter earnings results after the market closes on October 30. Sanderson believes the company is likely to beat all of its current estimates.
“We are comfortable with a 4% acceleration in revenue growth in the third quarter driven by a strong September with government-sponsored trade-in rebates that boosted sales of home appliances and consumer electronic products. We expect a better net result for the third quarter,” he wrote.
Sanderson also said his headline forecast would be conservative and highlighted JD management's efforts to save costs through a decline in consumer spending. Meanwhile, the analyst also pointed to the Chinese central bank's new stimulus efforts as an additional incentive.
“We believe the Jordanian dinar will likely benefit greatly from consumption stimulation,” he wrote.
Jordanian Dinar shares rose 38% in 2024.
JD chart YTD
Barclays downgrades UPS in case of near- and long-term headwinds
Igor Golovnov | Rocket Lite | Getty Images
Barclays is not continuing UPS.
The bank downgraded the shipping stock's rating to below equal weight. Analyst Brandon Oglinsky left his $120 price target unchanged, meaning UPS shares could fall 12% from Friday's close.
In the near term, Oglinski sees risks to UPS's earnings that could mean the company is unable to meet “management's fairly aggressive guidance in the back half of 2024.” Longer term, Amazon poses a significant threat, as it still accounts for 12% of UPS's total revenue.
“With the e-commerce provider operating a delivery network that rivals the size of UPS, we see insourcing risks remaining a significant burden in the coming years, especially as UPS attempts to extract higher prices from the company,” the analyst wrote.
Oglinsky added that since UPS has increased its dividend significantly during the pandemic, he sees “limited ability” for earnings growth in the next few years. UPS's valuation may be further constrained by increasing competitive pressures from non-union FedEx.
“Investors should consider future competition from the non-union FedEx US Express and Ground merger, which will likely rival or exceed UPS' throughput, which will be constrained on a proportional basis by union labor rules as well as contracted wages and benefits,” the analyst said. books.
UPS shares are down nearly 14% over the year.
UPS year-to-date chart
European markets open slightly lower
European markets opened slightly lower on Monday.
The European Stoxx 600 index fell 0.1% shortly after the opening bell, with most sectors in negative territory.
-Sam Meredith
Where profits stand
Of the 14% of S&P 500 companies that have posted results so far this earnings season, 79% beat expectations, as of Friday's close, according to FactSet.
But companies are accelerating their pace this week. Nearly a fifth of the S&P 500 companies are scheduled to report results Monday through Friday.
– Sarah Maine
Leading indicators are scheduled for release on Monday
Key indicators for September are scheduled to be released on Monday at 10 a.m. ET.
Economists polled by FactSet expected it to show a 0.3% decline last month, down from a 0.2% decline in the previous reading.
– Sarah Maine
Stock futures are open little changed
Stock futures opened little changed Sunday night.
Dow Jones Industrial Average futures rose 36 points, or 0.08%. Standard & Poor's 500 and Nasdaq 100 futures rose 0.09% and 0.08%, respectively.
– Sarah Maine
