Credit Suisse Slashes its Market Forecast Over Coronavirus

On Monday Credit Suisse slashed its market forecast for the year and said the earnings growth for companies in the U.S. will be near zero.

According to Chief U.S. equity strategist Johnathan Golub, the S&P 500 is projected to end the year at 3,300, up 11% .

His previous target was 3,600. The firm slashed its 2020 earnings per share forecast to $165 from $175, for a decline of about 5.7%.

“Investor perceptions surrounding the impact of the coronavirus have shifted from a supply chain disruption to a global demand shock,” wrote Golumb in a note to clients Monday.

According to Credit Suisse, what started as a supply chain disruption has evolved into a “global demand shock,” and that there’s likely “further downside to stock prices over the near-term” before markets turn a corner.

Major indices were declining on Monday as coronavirus cases continue to rise across the world. It also didn’t help that an oil price war began over the weekend with oil prices plummeting to multi-year lows.

According to Golub, the majority of the economic impact from the coronavirus will be felt in the second quarter, before business activity rebounds in the second half of 2020 and into 2021.