Goldman cuts U.S. financials, admits goofed on upgrade
Monday June 23, 12:49 pm ET

(Reuters) - Goldman Sachs & Co strategists urged U.S. stock investors to "underweight" the nation's financial and consumer discretionary sectors, admitting that it was mistaken when it upgraded both sectors just seven weeks earlier.

The downgrades sparked selling in stocks in both sectors, as investors feared that weakening consumer demand and deterioration in the credit markets would weigh on profitability.

"We boosted our consumer discretionary and financials weights in May on the belief the sectors would benefit from bank recapitalizations and fiscal stimulus," Goldman strategists led by David Kostin wrote. "Our thesis was clearly wrong in hindsight."

Goldman had previously urged investors to overweight consumer discretionary stocks, and maintain a neutral weight in financials....

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