Goldman Sachs analysts said the economic impact will be limited and investors should look to cyclical and value stocks.
Goldman analysts said the virus would hit U.S. economic growth by up to 0.5 percentage points in the first quarter, but the drag would be recouped over the next two quarters and the global damage could be as low as 0.1 percentage points over the full year. “The impact of the lower global and U.S. economic activity on 2020 S&P 500 earnings per share will be limited,” they said.
“Investors who believe the economic consequences of the coronavirus will be limited should increase exposure to cyclicals and value stocks,” Goldman Sachs analysts, led by David Kostin, said in a note.
The basket’s stocks set to outperform the most are semiconductor company Skyworks, IT services provider DXC, hotel and casino operator Wynn Resorts, technology company Broadcom and manufacturer of construction equipment Caterpillar, the note said.