Stick to stocks with these qualities to guard against ‘unexpected shocks,’ says Goldman Sachs

Judging by futures action, the index SPX, +0.45% seems ready to have another go at that 3,000 level, which it briefly topped Wednesday, thanks to dovish comments from Fed Chairman Jerome Powell. For Thursday, he’s back on Capitol Hill where we'll see if he can keep the momentum going for stocks and other assets that have rediscovered their mojo.Dovish remarks by #Fed Chair #Powell do more than solidify very high expectations of a 25 basis points cut later this month.

“As for the elevated risk premium demanded by investors to hold low-quality assets relative to high-quality assets, we view it as a late-cycle insurance premium against an unexpected shock,” said the strategists. For Goldman, higher quality stocks offer more solid balance sheets and less risk, though for that investors often pay a bit more.

Note, the iShares Edge MSCI USA Quality Factor ETF QUAL, +0.42% is up 21% year to date. Here are its top five holdings: Johnson & Johnson JNJ, -0.14% Apple AAPL, +0.99% Mastercard MA, +0.75% , Facebook FB, +1.77% and Visa V, +0.89% Read more about the ETF here.The market Dow YMU19, +0.38% S&P ESU19, +0.23% and Nasdaq NQU19, +0.22% futures are firmer after Wednesday’s powerful session.Europe stocks SXXP, +0.26% are a mixed bag, while Asia ADOW, +0.72% tracked Wall Street higher.

The buzz Latest information on Potential Tropical Cyclone Two. No changes to ongoing watches. The system is still expected to gradually gain strength south of Louisiana Thursday and Friday and make landfall along the coast on Saturday. #lawx #mswx pic.twitter.com/BEXPVQOc5a

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Goldman Sachs warns investors that a Fed rate cut won't do much for the stock market'A lot of that rise in the market, in my estimation, is already behind us,' says Goldman strategist David Kostin. Folks the Economy May look rosy right now. But it’s not. A recession is likely within the next year. Not sure how bad, but my instinct tell me it’s coming. They are confused. Sure make easier to borrow more money for pet projects
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