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March
16 (Reuters) - Goldman Sachs said severe disruptions to oil supplies from the ongoing Middle East conflict could push the S&P 500 index down to nearly 5,400 this year, or about 19% below current levels.
The index last closed at 6,632.19 on Friday.
* In a scenario where there is a "moderate" U.S. economic growth shock,Goldman expects the index would fall to 6,300, nearly down 5% from currentlevels. * The AI investment boom should offset the drag from modestly weakereconomic activity, the brokerage added. * Outside the Middle East conflict, Goldman expects the uncertaintysurrounding the impact of AI to weigh on index valuations. * Factoring in AI uncertainty, Goldman lowered its year-end S&P 500 forwardprice-to-earnings (PE) ratio to 21 from 22 earlier. * Under scenarios where growth is "moderate" and oil supply shock "severe",PE ratio could drop to 19 and 16, respectively, the brokerage added. * "The baseline outlook for U.S. equities remains constructive, but the warin Iran adds to the downside risk posed by elevated valuations," Goldman said. * It retained its year-end forecast for the benchmark index at 7,600. * Earlier this month, Goldman said it sees near-term "correction risks" forglobal stocks on geopolitical worries, AI disruption and elevated valuations.(Reporting by Kanchana Chakravarty and Siddarth S in Bengaluru; Editing by Diti Pujara)
