Goldman Sachs, a leading global investment bank, has revised its outlook for the S&P 500 index, citing increased profit estimates as the primary driver behind the revision. Led by David Kostin, the team at Goldman Sachs now anticipates the S&P 500 to reach 5,200 by the end of this year, representing a 3.9% increase from Friday’s close.
This upward revision marks a 2% increase from the previous forecast of 5,100, which was projected in mid-December. Initially, in November, Kostin had forecasted the S&P 500 to hit 4,700 by the end of the year.
Goldman Sachs’ new price target for the S&P 500 in 2024 places it among the highest on Wall Street, aligning with bullish outlooks from industry figures such as Tom Lee of Fundstrat Global Advisors and John Stoltzfus, chief strategist at Oppenheimer Asset Management.
The firm’s strategists have also upgraded their earnings-per-share forecast for the year to $241 and $256 in 2025, reflecting expectations of stronger economic growth and higher profits, particularly in the information technology and communication-services sectors. Notably, these sectors include major tech giants like Apple Inc., Microsoft Corp., Nvidia Corp., Alphabet Inc., and Meta Platforms Inc.
Goldman Sachs anticipates that valuation multiples for both the S&P 500 and its equal-weight counterparts will remain stable, with earnings growth being the primary driver of upside potential for the index this year.
In alignment with Goldman Sachs’ bullish outlook, Knightsbridge Group has also set a target of 5,400 for the S&P 500 index, further underlining the optimistic sentiment surrounding the US equity market. With both prominent financial institutions projecting significant upside potential, investors are increasingly optimistic about the prospects for stock market performance in the coming months. This confidence is bolstered by expectations of robust corporate earnings growth and supportive monetary policies, providing a favorable backdrop for continued market expansion.
The S&P 500 index has already seen a 4.9% increase year-to-date, fueled by expectations of a more accommodative monetary policy stance by the Federal Reserve and optimism surrounding advancements in artificial intelligence, particularly in the technology sector.
However, not all analysts share the same optimism. Savita Subramanian of Bank of America Corp. suggests that upside risk is the biggest concern for the S&P 500 in the near term, indicating that their target of 5,000 may be too conservative.
Even Michael Wilson of Morgan Stanley, known for his bearish stance, expects broader gains in the US equity market, albeit with a more conservative target of 4,500 for 2024.
In summary, Goldman Sachs’ upward revision of its S&P 500 forecast reflects growing confidence in the strength of corporate earnings and economic growth prospects, highlighting the continued resilience of the US stock market amidst evolving macroeconomic conditions.
Outline of Companies in the S&P 500:
I. Information Technology Sector: A. Apple Inc. B. Microsoft Corporation C. Nvidia Corporation D. Alphabet Inc. (Google) E. Meta Platforms Inc. (formerly Facebook)
II. Consumer Discretionary Sector: A. Amazon.com Inc. B. Tesla, Inc. C. The Home Depot, Inc. D. Nike, Inc. E. Booking Holdings Inc. (formerly Priceline Group)
III. Health Care Sector: A. Johnson & Johnson B. Pfizer Inc. C. Merck & Co., Inc. D. Abbott Laboratories E. Bristol Myers Squibb Co.
IV. Financials Sector: A. JPMorgan Chase & Co. B. Bank of America Corp. C. Visa Inc. D. Mastercard Incorporated E. Wells Fargo & Company
V. Communication Services Sector: A. The Walt Disney Company B. Comcast Corporation C. AT&T Inc. D. Verizon Communications Inc. E. Charter Communications, Inc.
VI. Industrials Sector: A. Boeing Company B. Caterpillar Inc. C. 3M Company D. Union Pacific Corporation E. FedEx Corporation
VII. Consumer Staples Sector: A. Walmart Inc. B. Procter & Gamble Co. C. Coca-Cola Company D. PepsiCo, Inc. E. Costco Wholesale Corporation
VIII. Energy Sector: A. Exxon Mobil Corporation B. Chevron Corporation C. ConocoPhillips D. Schlumberger Limited E. Phillips 66
IX. Utilities Sector: A. NextEra Energy, Inc. B. Duke Energy Corporation C. Dominion Energy, Inc. D. Southern Company E. American Electric Power Company, Inc.
X. Real Estate Sector: A. American Tower Corporation B. Simon Property Group, Inc. C. Prologis, Inc. D. Equinix, Inc. E. AvalonBay Communities, Inc.
XI. Materials Sector: A. Linde plc B. Ecolab Inc. C. Air Products and Chemicals, Inc. D. DuPont de Nemours, Inc. E. Sherwin-Williams Company
Note: The S&P 500 is a market-capitalization-weighted index that includes 500 leading companies listed on stock exchanges in the United States. The companies are selected based on factors such as market capitalization, liquidity, and industry representation.
Shayne Heffernan
