Goldman Sachs Revises 2010 S&P 500 Target Down

It should come as a shock to no one that major investment houses and analysts have begun to make downward revisions to the forecasts for the stock market indexes, joblessness, and GDP growth for 2010 and 2011.

Goldman Sachs Group (NYSE: GS) moved its S&P 500 target for the end of the year to 1,200 from 1,250. That is probably not the end of the bank’s adjustments.

The S&P 500 sits at 1,124. A rise to 1,200 is less than 7%.Goldman predicts that 2010 EPS for the index will be $81 up from the original forecast of $78.

Recent data on housing shows that prices and sales continue to deteriorate. Unemployment is expected to stay above 9.5% for the balance of the year. Perhaps more important, the numbers of people who have been out of work for 26 weeks or more and 99 weeks or more are reaching Depression levels. The notion of a “jobless recovery” has lost its large following among economists.

The market won’t be at 1,200 at the end of the year. The economic forces in place will push corporate earnings down in the second half. A year-end number of 1,100 would be a blessing for investors.

Douglas A. McIntyre