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Goldman Sachs says sell the S&P 500

June 21, 2012: 3:51 PM ET

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Goldman Sachs' (GS) analysts told investors to sell the S&P 500 (SPX) Thursday and boy did they ever.

The S&P 500, which was already down 1%, dropped even further as Goldman's report bounced around email inboxes.

Goldman's analysts said they could see the S&P 500 drop to 1,285, roughly 5% below its current levels. Heading into the close, the broad index was down more than 2% at 1,326.

Analysts Noah Weisberger and Aleksandar Timcenko cited the sharp drop in the Philly Fed index Thursday as just another piece of evidence that the ephemeral recovery has lost steam.

"We now think, with incremental U.S. monetary policy on hold, the market will need to confront a deteriorating growth picture near term," the analysts said.

Still they did add a few caveats. The S&P could pop or at least stay flat if the U.S. or Chinese economies start revving up or if European policy makers talk a big game about propping up the market.

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Maureen Farrell
Maureen Farrell
Staff writer, CNNMoney

Maureen Farrell is a staff writer at CNNMoney and covers Wall Street, banking, mergers and the stock and bond markets. Prior to joining CNNMoney, she covered venture capital and entrepreneurs for Forbes, and mergers and bankruptcy for Mergermarket and Debtwire, both divisions of the Financial Times.

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Stupid Stock Move of the Day
#StupidStock Move of the Day! $F down another 1.5% after 7.5% drop yesterday? Now only at slight premium to $GM? Really? Overreaction.
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