The Financial Associated Press (Shanghai, Editor Huang Junzhi) reported that recently, as the Delta mutant virus continues to raging, the US economic recovery has shown a slowdown, and Wall Street has begun to worry that this will cause the US stock market to plummet before the end of the year. But Goldman Sachs (Goldman Sachs) pointed out in the latest report that tax reform is the main risk to the US stock market before the end of this year, not an economic slowdown.
In August and September, it set new highs one after another, and has risen by 20% so far this year. Despite falling for 5 consecutive days last week, the distance from the all-time high can still be no more than 2%. As of the close of US stocks on Monday, the S&P 500 index rose 0.23% to 4,468.73 points.
According to statistics, the S&P 500 Index has hit a record 54 times so far this year, the most since 1995 in the same period. Some analysts said that they believe the possibility of a correction in the stock market in the short term is increasing, or at least the rate of return will be lower.
Goldman Sachs strategists said that as many institutions, including Goldman Sachs, lower their GDP growth expectations for the rest of 2021, investors are most worried about what the slowdown in growth prospects means for the stock market. Last month, Goldman Sachs sharply lowered its US GDP forecast twice in three weeks, causing a stir on Wall Street and the financial media. Currently, the bank expects US GDP to grow by only 5.5% in the third quarter, lower than the previous 8.5%.
But in fact, a team of strategists led by David Kostin said that the stock market price movements in the past few months have already reflected the weakness of the general environment. However, “the market seems to have only partially priced the 2022 tax rate increase (risk),” the report reads.
Goldman Sachs estimates that the reduced version of the tax reduction plan proposed by President Biden will be passed and eventually become law. Kostin’s team said that if the government increases the domestic statutory corporate tax to 25% and increases the tax on foreign income, the performance of the S&P 500 index stocks may decrease by about 5%.
In order to raise funds for climate policy and the 3.5 trillion budget plan, on Monday, the House Ways and Means Committee of the US House of Representatives announced a new tax increase draft, which raised the maximum corporate tax rate from 21% to 26.5%, lower than the 28 proposed by US President Biden. %.
The strategists further explained, “Because tax reform is incorporated into our model, our 2022 EPS forecast is 3% lower than the bottom-up consensus estimate of $220. This has taken into account the effective tax rate of 19%. Since the 2017 tax cut, the effective tax rate has been 18%.”
Finally, Goldman Sachs said that under the uncertain economic and tax policy environment, stocks with stable earnings and strong balance sheets should continue to perform well.
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