The effect on stocks could be major.
A vaccine approval could lead to “the kind of rotation that started and petered out in May and early June, supporting traditional cyclicals, steeper curves and banks, and challenging tech leadership,” Goldman said in the report.
That might also be good news for financial firms since bond rates could creep higher.
But the Goldman economists warned of varying outcomes for stocks over the next few months. The most likely scenario, they say, is for the market to flatline, with the S&P 500 reaching a high of 3,390 by year’s end — only about 2% higher than current levels.
An early vaccine could cause the index to climb as high as 3,700 if there is an early vaccine, Goldman said — or it could plunge to just below 2,200 if a second wave leads to “a more significant reversal” in economic activity. That’s an extremely wide range.