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(Bloomberg) — Goldman Sachs Group Inc. strategists have boosted their year-end goal for the S&P 500 Index for a 3rd time, reflecting Wall Road’s optimistic outlook for earnings progress and the US financial system.
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The financial institution’s fairness strategists led by David Kostin now see the US inventory benchmark index ending the yr at 5,600, up from a 5,200 degree they predicted in February. The brand new goal implies a roughly 3% advance within the gauge from its Friday shut.
Goldman’s upgraded goal ties with that from UBS Group AG’s Jonathan Golub and BMO Capital Markets’ Brian Belski for the best on Wall Road.
The improve within the goal is “pushed by milder-than-average adverse earnings revisions and the next honest worth P/E a number of,” Kostin, the agency’s chief US fairness strategist, wrote in a word to purchasers on Friday.
The improve comes one month after Kostin reiterated the agency’s 5,200 goal, stating there was no additional room for upside within the 500-member gauge by December. The agency’s strategists first launched their 2024 goal in November, earlier than elevating it in December and once more in February. The S&P 500 closed at 5,431.60 on Friday.
Whereas the agency’s strategists maintained their earnings-per-share forecast for 2024 and 2025, they famous that strong earnings progress by the highest 5 megacap know-how shares have offset the “typical sample of adverse revisions to consensus EPS estimates.” Kostin additionally raised the S&P 500’s price-earnings a number of he deems honest to twenty.4 from 19.5.
Kostin gamed out a number of different eventualities by which shares can run even greater than his new baseline forecast. If features broaden out and carry the S&P 500 Equal Weight Index, the primary, cap-weighted benchmark might rise one other 9% to five,900 earlier than 2024 closes out. In his most optimistic case, if mega-cap “exceptionalism” persists, the gauge might soar to six,300 by the tip of the yr.
Conversely, if earnings estimates show too optimistic or recession fears resurface amongst buyers, the S&P 500 might see a correction of about 13% and fall to 4,700.
–With help from Elena Popina.
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