The stock market has been on a rollercoaster ride this year, but investors are reaping the rewards as markets have surged to new highs, surpassing analysts’ 2024 estimates. The S&P 500 has already climbed more than 10% since January, exceeding Goldman Sachs’ year-end target of 5,200.
The big question now is what comes next for investors. Goldman Sachs’ strategists are weighing in, presenting a scenario in which mega-cap tech stocks could drive the S&P 500 even higher, potentially reaching the 6,000 level by the end of the year. They note that this current rally in growth stocks is different from past market crashes, with investors focusing more on companies’ actual profits.
While enthusiasm for artificial intelligence is high, Goldman’s analysts believe that growth expectations and valuations for major tech, media, and telecom stocks are not in bubble territory. They also present a more conservative scenario in which the S&P 500 climbs 11% to 5,800 by year-end, simply catching up to pre-pandemic valuation levels.
However, these potential shifts higher are contingent on the Federal Reserve’s next policy move. Investors are concerned that the central bank may keep interest rates elevated for longer, impacting market performance. The analysts emphasize that a change in the interest rate outlook without an economic downturn is crucial for the market rally to continue.
In a worst-case scenario, if mega tech stocks fail to meet expectations, markets could see a 14% decline this year. But for now, Goldman analysts are sticking with their baseline prediction of 5,200 for the S&P 500, suggesting a slight drop before year-end.
Overall, the market outlook remains uncertain, with various factors at play. Investors will be closely watching the Federal Reserve’s actions and how tech stocks perform in the coming months.
