Goldman: Expansion in Stock Valuations Will End When the Fed Raises Rates
They expect interest rates to go up in September
Federal Reserve Chair Janet Yellen
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
The second-longest expansion in U.S. stock-market valuations in more than three decades is coming to an end, according to Goldman Sachs Group Inc.
Stock valuations have surged 62 percent since September 2011, the longest period of multiple expansion since the height of the Internet bubble in December 1999, when the S&P 500’s forward price-to-earnings ratio had climbed for 61 straight months, according to Goldman. The current run is 42 months old and Goldman predicts it will end when the Federal Reserve lifts interest rates, which the strategists believe will happen in September.