Goldman sees zero earnings growth for US companies this year because of coronavirus
According to Goldman Sachs, the earnings growth for the companies in the US will stagnant in this year because of the coronavirus. Goldman' s chief US equity strategist David Kostin said that " US companies will generate no earnings growth in 2020." This rapid spreading of the virus had cause the historic decline in the Dow Jones in which they dropped more than 8% since Feb 24. The S&P 500 fell about 8.6% and Nasdaq fell about 2.9%. Investors are still optimistic that market will bring it back up after the virus. but Goldman didn't think so, because the virus's impact on the supply chain had caused most of the big companies like Apple or Nike. So, with this virus going around the world, and stock markets declining in the past week, is this the start of another recession? Should people be worried?
https://www.cnbc.com/2020/02/27/goldman-sees-zero-earnings-growth-for-us-companies-this-year-because-of-coronavirus.html
4 comments:
Although Goldman Sachs is a very reputable source, I think that this assumption is pretty harsh. While coronavirus is currently making it's large impact on the economy right now, and this will definitely hurt companies with large supply chains out of Asia, I think that for many US companies they will be hurt now but will bounce back nearing the end of the year, and have small yet positive growth by year end. If Trump is reelected I could also see this having a positive boost to the stock market as well in November right before the holiday season.
I agree with scott that this is an aggressive forecast, and while the virus has disrupted many supply chains from US manufacturers operating in China and elsewhere, I believe this is only a short run shock to business confidence. The stock market is very volatile and we have seen many declines in the past 6 months, but I believe it will stabilize once the virus epidemic starts to lose its fearful momentum.
I also agree that the outlook is pretty far-fetched, but could be the case for many large international companies. It will be hard to counteract the effects that are coming due to the coronavirus. I don't think that this will be the start of another recession, but people should definitely be on high alert for other signs that could show one coming.
From the information gathered, the coronavirus is already decreasing growth. I believe this will continue to go on until this summer. The temperature will rise, and the coronavirus will not be as much of a scare. This will give investors more comfort. That being said, we might see a bit of a recession until the initial scare dies down. If we get to that point, I do not see it lasting long.
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