The anticipated economic fallout from the global coronavirus outbreak has been weighing on markets for weeks. Wall Street is close to a bear market, with major stock indexes having fallen nearly 20% from their February record highs.
It's the end of the bull market, according to Goldman Sachs.
After 11 years, 13% annualized earnings growth and 16% annualized trough-to-peak appreciation, we believe the S&P 500 bull market will soon end," said Goldman Sachs equity strategists.
Business activity is expected to be lower across the board, and Goldman's analysts have slashed their S&P 500 earnings per share forecasts to $157 for 2020, a 5% decline versus 2019. It's the second time this year that the bank lowered its earnings forecast.
The virus outbreak is expected to hurt global supply chains, trade and travel. The energy sector, which was already going to get hit with lower demand, now also has to deal with a price war between Saudi Arabia and Russia that is making matters worse.
But not all is lost. Goldman is expecting a rebound later in 2020 after the coronavirus impact begins to wane, and forecasts the S&P 500 to get back to 3,200 points. That would be a 11% increase from yesterday's close. But until the turnaround, the S&P could fall further.
Earnings growth will rebound in the fourth quarter of the year, the analysts said.