The Goldman Sachs Manhattan headquarters stands in Manhattan, New York City, New York, US. Picture: GETTY IMAGES/SPENCER PLATT
The Goldman Sachs Manhattan headquarters stands in Manhattan, New York City, New York, US. Picture: GETTY IMAGES/SPENCER PLATT

Bengaluru — US companies will generate no earnings growth in 2020 as the coronavirus spreads beyond China, deepening risks to global growth, Goldman Sachs said on Thursday.

The bank's analysts cut their baseline earnings per share estimate for S&P 500 index companies to $165 from $174 in 2020, implying that profits will likely remain unchanged from a year ago.

Analysts had forecast a 7.7% rise in earnings, according to Refinitiv data.

Goldman Sachs said the latest forecast reflected a severe decline in Chinese economic activity in the first quarter, lower demand for US exporters, supply chain disruptions and a slowdown in domestic economic activity.

The virus, which is believed to have originated in a market selling wildlife in the central Chinese city of Wuhan late in 2019, has infected about 80,000 people and killed more than 2,700, the vast majority in China. In the past week, several other countries also reported a spike in cases.

Goldman said it expected the S&P 500 to trade at about 2,900 points in the near-term, which is 14.4% below the index's record closing high hit on February 19, assuming the US 10-year treasury yield drops to 1%.

If the yield climbs to 1.5%, Goldman expects S&P 500 to hit 3,400 by the end of 2020.

Earlier in the day, Bank of America cut its world growth forecast to the lowest level since the peak of the global financial crisis in 2009.

Reuters