Goldman Sachs joins a growing list of strategists who have raised year-end targets for the S&P 500.
The bank’s equity strategy team raised its year-end target, previously set at 4,000, to 4,500 points. The increase in estimates is supported by the forecast of a “soft landing” of the economy and profits higher than expected.
“The 19x P/E multiplier is higher than our expectations, driven by some mega-cap stocks,” the company writes. “However, previous episodes of drastic market cap reductions have been followed by a ‘catch-up’ thanks to a broader revaluation. Potential AI-related earnings boost has broadened the positive outlook for equities, even as risks from a recession and Fed tightening monetary policy remain.
The S&P 500 officially entered the bull market last week and historically, stocks tend to rise at a rapid pace in the 12 months following the start of a bull market. Other strategists are also banking on history repeating itself, with Bank of America, the BMO, the RBC and Truist all raising their expectations for the S&P 500 in recent weeks.