Stock market poised to hit record highs this week as $85bn floods stocks, says Goldman Sachs

• Goldman Sachs predicts record highs for stocks this week as $85 billion moves into stocks.

• Systematic trading strategies and corporate buyback programs are driving demand, Goldman said.

• “Painful trading for stocks higher through mid-September after green light for restart on Friday.”

Record highs could be in store for the stock market this week as $85 billion of “unemotional demand” floods stocks, according to Goldman Sachs.

The bank’s trading desk, led by CEO Scott Rubner, said in a note on Monday that the stock faces little resistance to hitting new record highs in what has historically been a low-liquidity week for the market.

“I’m back at the All-Time High and I think we’re going to hit new highs this week. I think the FOMO will increase when the new record title arrives,” Rubner said.

He added: “We estimate $17 billion in unemotional demand between bots and corporates each day this week during the most liquid week of the year.”

The Dow Jones Industrial Average hit a record close on Monday, and as of Tuesday morning, the S&P 500 is less than 1% away from hitting its own all-time high.

The cohort of professional Wall Street trend followers known as CTAs are helping to fuel potential gains in stocks this week. Rubner said “everyone is going back to the pool” after systematic trading strategies overcame their downside exposure during the sell-off earlier this month.

“Painful trading for stocks is higher through mid-September after the green light was given for the restart on Friday,” Rubner said.

Corporate share buyback programs are also helping to fuel some of the advance and should continue until Sept. 13, when the next trading block window takes place ahead of third-quarter earnings results in mid-October.

“The corporate buyback holiday from August to September is historically strong. This two-month period is the second best of the year, with 20.7% of executions. The GS corporate buyout estimates authorizations of $1.15 trillion and $960 billion,” explained Rubner.

Ultimately, retail investors were unfazed by recent stock market volatility and “showed diamond hands by buying the decline,” Rubner said.

Whether Rubner’s prediction of impending record highs in the S&P 500 is correct likely depends on Nvidia’s second-quarter earnings results, due after the market closes on Wednesday.

With a market valuation of $3.12 trillion, the AI ​​chipmaker makes up nearly 7% of the index, meaning any move in Nvidia stock can have a pronounced impact on the broader market.

The story continues

Rubner ultimately expects the stock market’s record highs to be quickly followed by a volatile surge in trading in the second half of September, which has historically been a weak period for stocks.

From there, Rubner said the S&P 500 could trade as high as 6,000 by the end of the year, representing a potential upside of about 7 percent from current levels.

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