Goldman Sachs raises S&P 500 target

by / ⠀News / October 9, 2024
Goldman Sachs raises S&P 500 target

Goldman Sachs has raised its forecast for the S&P 500 index, projecting a 10% increase to 6,300 over the next year. The investment bank’s analysts, led by David Kostin, expect the index to reach 6,000 by the end of this year and further advance to 6,300 within the next 12 months. The revised targets are an upgrade from Goldman’s previous projections of 5,600 for year-end and 6,000 over the subsequent 12 months.

The analysts argue that profit margins are set to rise, with projected increases to 12.3% next year and 12.6% by 2026, compared to an estimated 11.5% for the end of this year. “The macro backdrop remains conducive to modest margin expansion, with prices charged outpacing input cost growth,” the analysts noted. Goldman’s earnings per share estimate for the S&P 500 has risen from $256 to $268, reflecting an 11% annual increase.

Goldman predicts S&P 500 growth

The index is also expected to benefit from resolving significant charges that affected the health care sector this year and growth in the information technology sector, driven by a semiconductor recovery. The bullish outlook comes amid a strong stock market performance, with the S&P 500 up 20% year to date, marking its best first nine months since 1997.

Investor optimism is fueled by promising predictions regarding AI’s potential and signs that the Federal Reserve may have successfully managed the economic landscape after a recent drop in unemployment rates. However, not all experts share this optimism. David Kelly from J.P. Morgan Asset Management cautions against investing heavily in risky, high-growth stocks.

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He advises investors to consider shifting their portfolios toward value assets or international equities as the current market valuations appear increasingly distorted. “I will say that although I think this is positive for the equity market, I am getting increasingly queasy about the fact that the equity market keeps on pricing in a soft landing,” Kelly said, adding that investors should “dial back risk” if they have already secured sufficient gains.

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