It Rose That Much... Wall Street Says "S&P 500 Index Could Reach 6000 by Year-End"

Goldman Sachs Scenario

Wall Street Sign (Asia Economy = Yonhap News)

As global investment banks (IBs) are raising their year-end target for the S&P 500 index this year, there is a forecast that the S&P 500 index has the potential to rise to 6000. This means the S&P 500, which has been hitting record highs consecutively, could increase by about 15% from its current level.

According to Bloomberg on the 24th (local time), the strategy team led by David Kostin of Goldman Sachs stated in an investment memo, “We are maintaining the existing forecast (5200) due to the expected number of interest rate cuts and steady economic growth outlook,” but also noted, “If the valuation of mega-cap (large technology stocks) continues to expand, the S&P 500 index could rise 15% from the current level and the price-to-earnings ratio (PER) could reach 23 times.”

While some voices criticize the AI rally as overly optimistic, the long-term expectations and valuations for large technology, media, and telecommunications (TMT) stocks are said to be far from a bubble. The S&P 500 index closed at 5234.18, up about 10% this year, boosted by strong U.S. economic indicators and expectations of interest rate cuts by the Federal Reserve (Fed) (as of the 22nd).

However, Goldman Sachs added, “For the market rally to extend further, it is necessary for the interest rate outlook to shift to cuts without economic deterioration.”

Goldman Sachs also presented a scenario where the year-end S&P 500 index would be 5800 by tracking valuations from 2018, before the COVID-19 pandemic. Even so, this figure is about 11% higher than the current level.

Within the IB industry, as the S&P 500 index’s rise this year has been steeper than expected, there is a trend of continuously raising year-end targets.

French bank Soci?t? G?n?rale raised its S&P 500 target from 4750 to 5500. Bank of America (BoA) and Barclays raised theirs to 5400 and 5300, respectively. UBS maintained its year-end target at 5200 but projected it could reach 5500 in an upside scenario.

However, if corporate sales growth estimates prove overly optimistic or if investors weigh stock prices amid recession risks, there is also a possibility that the S&P 500 index could close lower this year.

This content was produced with the assistance of AI translation services.