Goldman says the selloff on the stock market is "excessive"

While the S & P 500 index was down 9.7% since Oct. 3, Goldman Sachs reassured investors: the situation may not be as bad as the turbulence of the S & P 500 market. last month.

The October sale in US stocks left the market "oversold," writes Goldman's US equity strategist, David Kostin, in a note to clients. Moreover, aid is on the way in the form of buybacks, he wrote.

"The recent sale predicted a slower growth in the short term too brutal," writes Kostin's statement. "We expect continued economic growth and earnings growth to support the rebound of the S & P 500."

Shares have fallen this month due to concern over rising interest rates, which makes not only more expensive corporate debt, but also more competitive bonds by compared to the actions. The 10-year Treasury benchmark rose from 1.321% in July 2016 to 3.076% on Tuesday.

In addition to the 9.7% decline in the S & P 500, the Dow Jones Industrial Average fell 8.9% and the Nasdaq Composite was down 12.1% since October 3rd.

Investors are also worried about the impact of a trade war between the United States and China, which showed signs of escalation again on Monday, according to reports that President Trump could impose a new set of rights. customs duties on all remaining Chinese imports if trade talks take place next month between the United States. and China does not facilitate the trade war.

Kostin acknowledged that the US economy would raise concerns over the next few years, but not enough to warrant such a sharp drop in stock prices. He predicted that the S & P 500 would close the year at 2850, an 8% gain over the index 's closing on Monday.

A traditional stock support pillar may have been absent for much of this month. Goldman noted that a blackout period during which companies avoided stock repurchases in the two weeks prior to publication of the results coincided with the sale. Kostin said nearly half of the S & P 500 companies are no longer in a downturn, which could lead to $ 170 billion in buybacks next month.

Redemptions are expected to increase in 2018 because of the extra money that Trump's tax cuts have left in corporate coffers. But that did not help companies buy back shares. Two aggressive corporate ETFs in share buybacks – the SPDR S & P 500 Buyback ETF and the Invesco BuyBack Achievers ETF – both underperformed the S & P 500 Index this year.