Goldman Sachs has updated its projections for the S&P 500 index, citing expectations of U.S. interest rate cuts and continued strength in large-cap stocks as key drivers of its positive outlook.
Updated S&P 500 Targets
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3-month forecast: 6,400 (+3%)
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6-month forecast: 6,600 (+6%)
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12-month forecast: 6,900 (+11%)
These revised targets reflect Goldman Sachs’ anticipation of earlier and deeper Federal Reserve interest rate cuts, lower bond yields, and sustained performance from major large-cap stocks.
Earnings and Valuation Insights
Goldman Sachs maintains its earnings-per-share (EPS) growth forecasts for the S&P 500 at 7% for both 2025 and 2026. The firm has also increased its forward price-to-earnings (P/E) ratio forecast for the index from 20.4 to 22, indicating investor confidence despite potential near-term earnings weaknesses.
Market Context
Recent data showing less-than-expected tariff impacts and strong labor market indicators have supported market resilience. After a selloff in April following U.S. President Donald Trump’s tariff announcements, stocks have rebounded as hopes for trade deals and potential Federal Reserve rate cuts eased investor uncertainty.
