US companies will generate no earnings growth in 2020 as the coronavirus spreads beyond China, deepening risks to global growth, Goldman Sachs said on Thursday.
The bank's analysts cut their baseline earnings per share estimate for S&P 500 index companies to $165 from $174 in 2020, implying that profits will likely remain unchanged from a year ago.
Analysts had forecast a 7.7 percent rise in earnings, according to Refinitiv data.
Goldman Sachs said the latest forecast reflects a severe decline in Chinese economic activity in the first quarter, lower demand for U.S. exporters, supply chain disruptions and a slowdown in domestic economic activity.
The virus, which is believed to have originated in a market selling wildlife in the central Chinese city of Wuhan late last year, has infected about 80,000 people and killed more than 2,700, the vast majority in China. In the past week, several other countries also reported a spike in cases.
Goldman said it expects the S&P 500 to trade around 2,900 points in the near-term, which is 14.4 percent below the index's record closing high hit on Feb. 19, assuming the US 10-year Treasury yield drops to 1 percent.
If the yield climbs to 1.5 percent, Goldman expects S&P 500 to hit 3,400 by the year-end.
Earlier in the day, Bank of America cut its world growth forecast to the lowest level since the peak of the global financial crisis in 2009. (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Saumyadeb Chakrabarty)