Goldman Sachs has warned investors US stocks could slide after "awful" early Q1 earnings signs.
In a research note released overnight, the investment banking giant’s US chief strategist David Kostin says the S&P 500 could face a double figure slide in the near term.
Kostin has heightened investor fears the credit crisis has widened well beyond banking and financial names.
"Although only a few firms have reported (Q1) results, early signs are awful," the note reads.
"We expected generally disappointing results and a swathe of lowered profit guidance that will drive the S&P 500 lower in coming weeks."
However, the co-managers of Resolution Asset Management’s £116m American Growth fund are confident the US market can rebound by the end of the year.
Terry Ewing and Alison Porter are planning to gradually increase their financial weighting over the next two quarters, citing better borrowing arrangements for investment banks in recent months.
“I have just returned from the US and my trip confirmed our view that the US stock market will be a mixed bag going forward,” Ewing says.
“Consumers undoubtedly have major headwinds – namely the housing market, high fuel prices and rising unemployment – but there are lots of individual pockets of strength which present us with plenty of exciting investment opportunities.
“There does seem to be a more positive tone now and I believe the market will have made decent gains by the end of the year.”
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