Goldman Sachs has raised its year-end target for the S&P 500 index, anticipating a 4.32% upside as the benchmark index is projected to hit 6,000 by the end of 2024. According to a report by Reuters on October 7, the Wall Street investment giant adjusted its forecast due to expected stronger corporate growth margins and a stable macroeconomic environment through 2025.
Goldman Sachs revised its 12-month target for the S&P 500, boosting it by 300 points, from 6,000 to 6,300, reflecting confidence in the continued performance of the U.S. equity market. Additionally, the investment firm increased its 2024 year-end target from 5,600 to 6,000. These adjustments suggest Goldman sees favorable conditions for corporate America, including growth from key sectors and broader economic stability.
The firm also provided optimistic estimates for earnings per share (EPS) growth. Its 2025 EPS forecast was raised to $268 from $256, marking an 11% annual rise. While maintaining its 2024 EPS estimate at $241, Goldman cited increased margin expansion as the key driver for the higher 2025 projection. David Kostin, an analyst at Goldman Sachs, noted, “Our forward EPS estimates reflect a steady macro outlook…(and) the primary driver of the upward revision to our 2025 EPS estimate is greater margin expansion.”
U.S. Economy: Positive Outlook and Tech Sector Boost
The U.S. economy showed stronger-than-expected growth in the second quarter of 2024, supported by robust consumer spending and a rebound in corporate profits, which is expected to sustain the current expansion. Goldman’s optimistic outlook is further supported by gains in the technology sector, including a recovery in the semiconductor industry, both of which are expected to bolster EPS growth for corporate America.
As of the latest data, the S&P 500 has gained nearly 20% year-to-date, trading near record highs. This reflects overall market confidence, despite uncertainties about economic growth and potential headwinds.
In a further optimistic turn, Goldman Sachs has lowered its odds of a U.S. recession to 15%, down from 20%. This revision signals that the firm is increasingly confident in the resilience of the U.S. economy, with a solid foundation of consumer spending and corporate profitability that is likely to extend growth well into 2025.
Overall, Goldman Sachs’ raised targets for the S&P 500 and the improved economic outlook suggest that the firm sees continued opportunities for investors, driven by a combination of macroeconomic stability, corporate growth, and sector-specific performance.
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