CNBC Pro

Goldman sees low earnings growth and lackluster market returns through 2018

Michael Nagle | Bloomberg | Getty Images

Goldman Sachs on Monday reduced earnings estimates for the through 2018, citing a challenging economic environment.

The cautious outlook by Goldman came as the S&P index trades at about 2 percent from its all-time high, and as many Wall Street pundits cheered better-than-expected third-quarter earnings reports this month.

"The U.S. economy will remain stuck in a slow secular growth regime " Goldman's chief U.S. equity strategist, David Kostin, wrote in a note to clients.

"S&P 500 margins will increase slightly next year, but remain well below the peak."

Goldman now sees just 5 percent earnings growth for S&P 500 companies this year, followed by 10 percent growth in 2017 and back down to a 5 percent pace in 2018. Accordingly, the firm sees the S&P 500 falling about 3 percent from now until the end of the year. Its year-end S&P 500 forecasts for 2017 of 2,200 and for 2018 of 2,300 call for gains of about 2 percent and 6 percent, respectively, from current levels.

More In Pro News and Analysis

RBC just named its top picks for the fourth quarter. These are some of the stocks that made the cut
CNBC ProRBC just named its top picks for the fourth quarter. These are some of the stocks that made the cut
Market is heading toward the ‘best week of the year,’ pro says — and names 2 stocks to play it
CNBC ProMarket is heading toward the ‘best week of the year,’ pro says — and names 2 stocks to play it
Goldman says these stocks with high cash returns will work in this economy. One of them could nearly double
CNBC ProGoldman says these stocks with high cash returns will work in this economy. One of them could nearly double