STOCKS NEWS US-Goldman cuts year-end price target on S&P 500

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U.S. stock market report [.N] 1034 ET 26Feb2009-Goldman cuts year-end price target on S&P 500 ------------------------------------------------------------------------------

Goldman Sachs on Thursday lowered its year-end price target on the S&P 500 .SPX to 940, a level that still represents upside of 22 percent. However, the firm has a near-term target of 650, a level that represents downside of 15 percent.

"Peak-to-trough, we expect S&P 500 operating earnings to fall 56 percent, the third-worst fall in corporate earnings over the past 100 years. Excluding provisions and write-downs, we forecast $63 in 2009 and $71 in 2010," the firm wrote.

Goldman said it was remaining defensive on the index, and that it expects the market to remain within a trading range around 750, "but see risks skewed to the downside in the near-term."

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 1025 ET-26Feb2009 VIX drops modestly as stocks extend gains ------------------------------------------------------------------------------

The CBOE Volatility Index .VIX, the implied volatility measure for the S&P 500 index .SPX, fell 4.57 percent to 42.63 as U.S. stocks extend gains in morning trade. On Wednesday, the VIX fell and closed at 44.67 as the S&P 500 index also dropped. "The failure of the VIX and the SPX indices to maintain their tight negative correlation follows several days in which the VIX has responded asymmetrically to movements in the market," said Michael McCarty, chief equity and options strategist at Meridian Equity Partners in a note. The VIX has risen less as the market has fallen while falling more when the market rises or even falls modestly. "This behavior of the 'fear index' would suggest that investor anxiety is lessening as the machinations of the federal bailout, stimulus bill and budget processes move forward," he said.

Reuters Messaging: doris.frankel.reuters.com@reuters.net 1011 ET 26Feb2009-Citi sees increased risks for natural gas ------------------------------------------------------------------------------

Citi on Thursday forecast increased risks for natural gas, saying that demand would be too soft for it to avoid additional price weakness, though rig count should help drive the market into better balance.