**Goldman Sachs Raises S&P 500 Year-End Target to 5,600
Goldman Sachs has revised its 2024 year-end target for the S&P 500 Index to 5,600 from 5,200, attributing this upgrade to robust earnings growth by five mega-cap U.S. tech stocks and a higher fair value price-to-earnings ratio multiple.
Microsoft, Nvidia, Google, Amazon.com, and Meta Platforms have collectively surged by 45% and now make up 25% of the S&P 500 equity cap, according to a brokerage note released after markets closed on Friday.
Drivers of the Rally
**"The drivers of the rally include upward revisions to consensus 2024 earnings estimates for these same tech companies, and valuation expansion stemming from increased investor enthusiasm about artificial intelligence (AI)."* The upgraded target reflects an upside of about 3.1% to the index's last close of 5,431.60. The brokerage anticipates roughly unchanged real yields by year-end and strong earnings growth to support a 15x P/E for the equal-weight S&P 500 Index.
Election Year Uncertainty
The U.S. election remains a key risk to the S&P 500 level and falls between our 3-month and year-end forecast horizons, said analysts at Goldman Sachs. The United States is set to hold its next presidential election in November. The brokerage noted that index volatility typically increases before the election but subsides—and then rebounds to an even higher level—following the electoral process.
By focusing on pivotal market drivers and key economic indicators, Goldman Sachs provides a more optimistic outlook for the S&P 500, while also cautioning about the potential volatility tied to political events.
