Goldman Sachs Predicts S&P 500 to Hit 5200 by Year-End

Amid the U.S. stock market continuously breaking records this year, investment bank Goldman Sachs has raised its year-end forecast for the Standard & Poor’s (S&P) 500 index. According to Bloomberg, on the 19th (all local time), Goldman Sachs revised its year-end S&P 500 forecast from the previous 5100 to 5200. This is a 3.9% increase from the closing point of 5005 on the 16th.

The S&P 500 index has risen 5.5% so far this year. This is why Goldman Sachs raised its forecast again just two months after revising it from 4700 to 5100 at the end of last year.

Furthermore, Goldman Sachs raised this year’s and next year’s earnings per share (EPS) forecast for companies listed on the S&P 500 index to $241 and $256, respectively, from the previous estimates of $237 and $250.

They believe that the soft landing of the U.S. economy and the strength of large-cap stocks will further push up stock prices. “The growth of the world’s Gross Domestic Product (GDP) and the depreciation of the dollar will raise the EPS,” Goldman Sachs analyst David Kostin said. “The increase in the profits of major companies will also be a major driving force for the rise in the stock market this year.” Bloomberg Intelligence predicts that the earnings of companies listed on the S&P 500 will increase by 8.8% compared to last year.

In particular, they focus on five companies, including Apple, Microsoft, Nvidia, Alphabet, and Meta Platforms, among the companies known as the “Magnificent 7.” They predict that these companies’ performance will improve due to the growth of the artificial intelligence (AI) industry and the recovery of the consumer market.

The Bank of America also stated earlier this month that “the S&P 500 index will rise in the short term” and “the previous target of 5000 is too low.”

On the other hand, Morgan Stanley weighed on the decline in stock prices. Morgan Stanley’s Chief Investment Officer (CIO), Mike Wilson, suggested a year-end forecast at around 4500, even though he said the tech-focused rally could expand to other sectors. This is about 10% lower than the current level.