The New York Stock Exchange (NYSE) is pictures on May 26, 2020 at Wall Street in New York City.

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U.S. companies, which suffered the second largest quarterly decline in margins since 1970, will have a difficult time bouncing back this year amid endless uncertainty on multiple fronts, Goldman Sachs said. However, a number of stocks will be able to buck the trend and grow profits in 2020.

The bank reiterated its year-end S&P 500 price target of 3000, below Friday’s close of 3,044.31.The S&P 500 rallied above the 3,000 level last week amid optimism about the economy reopening. Now the market’s massive comeback is put to the test with rising risks regarding U.S.-China tensions and presidential election, which creates a difficult backdrop for companies to recover, Goldman said. 

“Uncertainty around virus developments and the pace of re-hiring could present fundamental challenges while escalating rhetoric around US/China trade and the 2020 election that is less than six months away present policy risks,” David Kostin, Goldman’s head of U.S. equity strategy, said in a note.

The bank forecast that the S&P 500 net profit margins will decline by 200 basis points in 2020 to 8.7%, the lowest level since 2010, but will rebound toward their record high of 11.2% in 2021.

In this continuous slowdown, Goldman is advising clients to buy stocks with the fastest expected return-on-equity growth. ROE is a measure of profitability that is calculated by dividing net income by shareholders’ equity.

Originally published at CNBC

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