Updated February 19th, 2024 at 12:07 IST

Goldman Sachs Raises S&P 500 target to 5,200 amid bullish profit prospects

Goldman's latest forecast anticipates an 8% surge in profits for S&P 500 companies throughout the year.

Reported by: Business Desk
Goldman Sachs S&P forecast | Image:Unsplash
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S&P 500 2024 target: American multinational financial services company Goldman Sachs has upped its year-end target for the S&P 500 index to 5,200, signaling a potential 4 per cent upside from current levels. This adjustment reflects an enhanced earnings outlook for companies listed on the index, the investment firm revealed.

Previously, Goldman Sachs had projected the S&P 500 to reach 5,100 by the end of 2024. However, bolstered by cooling inflation trends and anticipations of monetary policy adjustments by the US central bank, the brokerage revised its forecast upwards from 4,700 in December.

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Goldman's latest forecast, unveiled on Friday, anticipates an 8 per cent surge in profits for S&P 500 companies throughout the year. This optimistic outlook is underpinned by an improved economic landscape in the United States and strengthened profit margins among mega-cap corporations.

David Kostin, lead strategist at Goldman Sachs, said, "We expect strong world GDP growth and a slightly weaker dollar will support EPS, while lower rates and lower oil prices will be a slight drag."

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Kostin highlighted the anticipated robust earnings performance of mega-cap stocks, particularly those identified as the "Magnificent 7," which is expected to drive aggregate S&P 500 profits in 2024. The anticipated growth in artificial intelligence and consumer spending is poised to foster revenue expansion alongside margin improvement.

Moreover, Kostin foresees the Magnificent 7 stocks outperforming other sectors within the S&P 500 in terms of earnings growth.

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While operating margins for the broader index are also anticipated to witness improvement, Kostin noted that this enhancement would be relatively modest. Factors such as moderated input costs, including wage growth, coupled with robust sales expansion and marginal price disinflation, are expected to contribute to this incremental margin improvement.

Goldman Sachs' upward revision in the S&P 500 target reflects growing optimism regarding the trajectory of corporate earnings and economic fundamentals, providing investors with a bullish perspective for the year ahead.

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(With Reuters inputs)

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Published February 19th, 2024 at 12:07 IST