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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: altair19 who wrote (159362)	1/30/2009 5:31:38 PM
From: stockman_scott	Respond to of 362366

Goldman Says Stocks Need Stimulus Plan, S&P 500 May Drop to 752 By Lu Wang Jan. 30 (Bloomberg) -- U.S. stocks won’t rally until Congress approves President Barack Obama’s economic stimulus plan and the Treasury resolves how to use its remaining financial- rescue funds, according to Goldman Sachs Group Inc. The Standard & Poor’s 500 Index will probably “retest,” or fall toward or below, the 11-year low of 752.44 it sank to in November, strategist David Kostin wrote in a report today. Still, the benchmark index for U.S. stocks will end this year at 1,100, a 30 percent surge from yesterday’s close, he said. The yearlong recession and dwindling credit forced consumers to scale back spending and companies to cut profit forecasts. To revive growth, the government set up the Troubled Asset Relief Program to help banks, and the House this week passed a more than $800 billion stimulus package. The Senate hasn’t voted yet. “Passage of a stimulus plan and resolution regarding the remaining TARP capital are critical milestones that must be passed for the S&P 500 to trade higher,” wrote Kostin, Goldman Sachs’s U.S. investment strategist. The S&P 500 last year tumbled 38 percent, the most since the Great Depression, after the collapse of Lehman Brothers Holdings Inc. froze credit markets and more than $1 trillion in losses at financial firms eroded profits. Since sinking to 752.44 on Nov. 20, the benchmark has gained 11 percent to 835.55. Kostin advised that investors buy health-care stocks and companies that make and sell consumer staples, or items that don’t tend to suffer a reduction in demand during a recession. Wal-Mart Stores Inc. and Centene Corp. are among companies that may benefit from tax cuts and a proposed increase in federal spending on Medicaid, the strategist said. ‘Rotation Process’ Jeffrey Palma, head of global equity strategy at Zurich- based UBS AG, recommended cutting investments in those industries in his own report today, saying people shouldn’t only make defensive investments. Technology stocks and consumer companies reliant on discretionary spending are attractive because they have “tended to outperform even while consumer sentiment is weak,” he said. “We advocate making a first step in a rotation process to move to a less defensive position,” he said. “The depth of the slowdown and a multi-year balance sheet repair process suggest the probability of a strong cyclical rebound is relatively low.” To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net Last Updated: January 30, 2009 12:20 EST