'Buy the dip,' Goldman Sachs says, forecasting S&P 500 at 8,000 this year

Goldman Sachs is calling the recent selloff in US equities a buying opportunity, forecasting that the S&P 500 could surpass the 8,000 mark before the end of the year.

John Flood, Goldman Sachs' head of US equity trading, told Bloomberg TV on Saturday that the bank views the decline as a chance to buy in. "There is a clear path for the S&P 500 to exceed 8,000 this year," he said.

"Historically, investors who bought when the S&P 500 pulled back more than 2 percent have seen strong returns," Flood added.

The comments came as investor sentiment soured following a sharp drop in New York markets the previous day.

The S&P 500 fell 200.63 points, or 2.65 percent, to close at 7,383.68 on Friday, while the Nasdaq dropped 1,121.53 points, or 4.18 percent, to 25,709.43 — the steepest single-day declines for both indexes since April last year.

For the week, the S&P 500 and Nasdaq fell 2.6 percent and 4.7 percent, respectively, snapping a nine-week winning streak.

Flood said the market has not yet entered overheated territory. Goldman Sachs' sentiment indicator — which aggregates positioning data from hedge funds, mutual funds, retail investors and foreign investors — remains at a neutral level even after the S&P 500 set 24 all-time highs this year.

He also said ample cash remains on the sidelines. Mutual fund cash holdings are near their long-term average, leaving room for additional flows into equities.

Flood struck an optimistic note on corporate earnings as well. "If we started to see broad earnings disappointment across the S&P 500, that would be very concerning," he said. "But we are simply not seeing any signs of that."

On risk factors such as inflation and stress in the private credit market, Flood characterized them not as signals of deteriorating sentiment but as a healthy "wall of worry."