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The two key risks to Goldman Sachs’ S&P 500 forecast are oil and interest rates, according to a report from the firm’s U.S. equity strategy team.Oil‘s threat is pretty clear. Goldman says clients are concerned about supply side issues from instability in the Middle East, but they don’t believe the current rise will be enough to “derail the current bull market in U.S. equities.” And while Goldman’s commodity team believes WTI oil is dipping below $100, they recommend investors buy energy stocks and sell consumer discretionary companies, if they believe in the oil price shock story.
Interest rates are fear number one for clients, according to Goldman. They say that if the Fed does raise rates, energy stocks are likely to under perform, while information technology stocks will do well in the short term. The firm, however, doesn’t expect a rate hike until 2012, at the earliest.
So while Goldman analysts say these threats exist, they don’t seem particularly worried about them.
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