Goldman Sachs Group Inc. has once again raised its year-end target for the S&P 500 Index, reflecting a bullish outlook on earnings growth and the US economy. The bank’s equity strategists, led by David Kostin, now predict the US stock benchmark index will finish the year at 5,600, up from their previous prediction of 5,200 in February.
This upgraded target is in line with other top Wall Street analysts, such as UBS Group AG’s Jonathan Golub and BMO Capital Markets’ Brian Belski. Kostin attributes the increase to “milder-than-average negative earnings revisions and a higher fair value P/E multiple.”
Despite maintaining their earnings-per-share forecast for 2024 and 2025, Goldman Sachs notes that strong earnings growth from the top five megacap technology stocks has offset typical negative revisions to consensus EPS estimates. Kostin also raised the S&P 500’s fair price-earnings multiple to 20.4 from 19.5.
In a more optimistic scenario, if gains broaden out and lift the S&P 500 Equal Weight Index, the benchmark could rise another 9% to 5,900 by the end of 2024. However, if earnings estimates prove too optimistic or recession fears resurface, the S&P 500 could see a correction of about 13% and fall to 4,700.
Goldman Sachs’ continued optimism for the S&P 500 reflects a positive sentiment on Wall Street for the US economy and corporate earnings growth. Investors will be watching closely to see if the index can reach these new targets by the end of the year.
