Wow! The rally in U.S. stocks is simply irresistible! Even Goldman Sachs has once again raised its year-end price target for the S&P 500. Like a shocking reversal, their optimism is 500 points higher than before! Let's take a look at what makes them so happy!
Goldman Sachs Group Inc. strategist David Costin led his team and set a price target for the S&P 500 for 2024 a few months ago. But this time they raised their ** again, as US stocks broke through the important milestone of 5,000 this month.
In a note to clients on Friday, Costin wrote: "We raised our earnings guidance, which is the driving factor behind this adjustment. "It seems that they are very optimistic about the future earnings prospects.
Now, Goldman Sachs expects the S&P 500 to rise to 5,200 by the end of the year, up about 2% from December. And the initial ** was only 4700 points. This new price target implies that the S&P 500 will continue**39%, that's exciting!
Goldman Sachs' year-end price target has become one of the most optimistic on Wall Street. Others, such as Tom Lee of Fundtrat Global Advisors and John Stolzfors of Oppenheimer Asset Management, share a similar view of the outlook for 2024.
They also raised the S&P 500's earnings per share** for the year from $237 to $241 and for 2025 to $256 from $250 to $256. This reflects their expectation of "stronger growth and higher profits" in the IT and communications services sector. The "Big Seven" in these industries, such as Apple, Microsoft, Nvidia, Alphabet and Meta, will be the main drivers.
By comparison, other Wall Street strategists have earned a median of $235 per share for the year. Goldman Sachs, it seems, is a little more optimistic about the growth of these sectors.
Goldman Sachs strategists also expect the S&P 500 and its equal-weighted index to maintain price-to-earnings ratios close to current levels of 20x and 16x, respectively. In other words, earnings growth will be the main driver of U.S. stocks this year.
The S&P 500 has been up 4 so far this year9%, driven by expectations of a Fed policy shift and optimism in the AI space** in tech stocks. According to Bloomberg Industry Research, earnings of the index's 500 constituents are expected to grow by 8 percent year-on-year in 20248%。
Other Wall Street peers, such as Bank of America, have also hinted that they may raise their year-end targets because investors are not optimistic enough. Currently, the median price target of the S&P 500 is 4,950 points for nearly a dozen ** strategists tracked by Bloomberg. But Savita Sabramania, a strategist at Bank of America, said: "In the short term, the biggest risk to the S&P 500 is**. Our price target of 5,000 pips may be too low. ”
Even Morgan Stanley's well-known bear, Michael Wilson, has changed his tune, believing that the rally in US stocks will extend to areas that have not been too popular so far. Although his 2024 price target for the S&P 500 is still 4,500 points, which is about 10% higher than last Friday's **price**.
What a show! The performance of U.S. stocks has been impressive, and investors are confident about the future. However, the market is always full of uncertainties, so we still need to stay calm and flexibly adjust our investment strategies according to market trends.
Goldman Sachs