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Analysts at Goldman Sachs published a detailed report on the global market outlook, especially about the US growth views and its implications for the S&P 500 index.

Key quotes

“US growth views have become a key driver of market outcomes.

Our forecasts imply that there is still room for market pricing of US growth views to move higher, particularly given improving prospects for an early vaccine. 

We show that as long as improving growth is in the driver’s seat, this would likely be consistent with further equity upside even if recent real yield declines were to reverse. 

Our own US growth forecasts, which were upgraded earlier this week, now incorporate a vaccine approval by the end of 2020, and widespread distribution by the end of 2021Q2 as the central case. 

A rise in our growth factor is -all else equal- associated with higher equity returns (a 25 basis point upward shift in growth expectations over the next two years is associated with a 4.5-4.9% lift to the S&P 500), as are lower real yields (a 25 basis point rise in real yields is associated with a 1.2-1.4% drag on equities).”