U.S stocks continue to edge higher and showing no signs of slowing down, even as major indices flirt with record highs. Goldman Sachs has since lifted its S&P 500 price target in anticipation of further upside action. The firm expects the index to close the year at highs of 3,600, representing a 20% gain.
U.S Stocks Rally
The remarks by Goldman Sachs come at a time when investors are increasingly shunning tailwinds that would most of the time fuel a sell-off spree. Markets are edging higher even as the COVID-19 pandemic continues to take a toll on the U.S economy. Investors have also shrugged off the U.S-China tensions, which in most cases would have dented sentiments in the stock market.
Amid the headwinds, stocks started the week on a roll with the S&P 500 rising 0.3% to close at 3,381.99, short of its record high. Tech laden NASDAQ was up 1%, advancing to a new record high of 11,129.73. The Dow Jones Industrial Average was the only index to close the red tanking of 0.3% to close at 27,844.
The NASDAQ closed at record high buoyed by an 11% jump by Tesla Inc. (NASDAQ: TSLA) as Amazon.com Inc. (NASDAQ: AMZN) also gained 1% as it continues to race higher after a recent pullback. Alphabet Inc. (NASDAQ: GOOGL) and Microsoft Corporation (NASDAQ: MSFT) also rose 0.7% to push NASDAQ higher.
In the S&P 500, the consumer discretionary segment was the best performing sector, rising 1.2%. Despite the gains, the index once again failed close above its February 19 record high of 3,386.1. According to Ari Wald of Oppenheimer, the index is overbought into key resistance and up against seasonal headwinds, which explains why it is struggling to close higher.
U.S Stocks Outlook
Trading volumes have also fallen significantly in recent days, with the SPDR S&P 500 ETF trading at just over 31 million shares against a 30-day volume average of 61 million. A decline in trading volume could as well be as a result of investors remaining cautious as most equities appear to be flirting with overbought conditions.
Wall Street also remains on edge amid lingering concerns over stalled coronavirus negotiations. Democrats and Republicans are currently entangled in a fierce stalemate over how to proceed with a new stimulus package needed to prop the struggling economy.
While the Democrats have proposed sending more than $900 billion to states and municipalities, Republicans are opposed to the same. The lack of a stimulus package is causing some jittery in the market.
Amid the slowdown in the equity markets, analysts at Goldman Sachs believe the stock market will continue powering high. Better than expected job numbers, as well as retail figures, affirm that the U.S economy is on a recovery path.
Similarly, the firm expects the economy to rise much faster in 2021, driven by expectations of a coronavirus vaccine approved by the end of the year. The firm expects per share estimates for the S&P 500 companies to increase to $170 a share against Wall Street’s $165.