Goldman Sachs analysts are predicting a potential 15% surge in the S&P 500, with the index reaching the 6,000 level by the end of the year. This optimistic forecast comes after the S&P 500 has already surpassed analysts’ 2024 estimates and rallied to new highs.
The current rally in growth stocks is being driven by mega-cap tech companies, according to Goldman Sachs’ chief US equity strategist, David Kostin. Unlike previous market crashes, investors are now focusing on companies’ actual profits rather than speculative valuations.
While there is enthusiasm for artificial intelligence and tech stocks, Goldman Sachs analysts believe that current growth expectations and valuations are not in bubble territory. They also presented a more conservative scenario in which the S&P 500 could climb 11% to 5,800 by year-end, catching up to pre-pandemic valuation levels.
However, the analysts caution that the Federal Reserve’s next policy move will be crucial in determining the market’s direction. Investors are concerned that the central bank may keep interest rates elevated for longer, impacting market sentiment.
In a worst-case scenario, where mega tech stocks fail to meet expectations, markets could see a 14% decline this year. Despite this, Goldman analysts are maintaining their baseline prediction of 5,200 for the S&P 500, suggesting a slight drop of about 1% before the year ends.
Overall, the market outlook remains positive, with analysts confident in the current trajectory of the federal funds rate and economic growth forecast being priced in by markets. Investors will be closely watching for any developments that could impact the market’s performance in the coming months.
