Goldman Sachs has significantly raised the Target Price for the S&P 500 Index, expecting it to reach 6,600 points by the end of the year, a substantial increase from previous expectations. The three-month Target Price has been raised to 6,400 points, and the twelve-month Target Price to 6,900 points. The core factors driving this optimistic outlook are twofold: first, there is a significant increase in market expectations for the Federal Reserve to cut interest rates, potentially starting in September, and second, the fundamentals of large listed companies remain strong, with solid profitability and growth prospects.
Goldman Sachs, the renowned investment bank on Wall Street, is becoming increasingly optimistic about the outlook for U.S. stocks, significantly raising the Target Prices.$S&P 500 Index (.SPX.US)$for multiple timeframes.
According to Research Reports released by Goldman Sachs on Monday evening, expectations for the Federal Reserve to cut interest rates have been moved forward and deepened, combined with the continuous strong fundamentals of large-cap stocks, leading to an increase in the return expectations for the S&P 500 Index over three months, six months, and twelve months.
The Research Reports indicate that the bank has raised the three-month return expectation for the S&P 500 to 3%, corresponding to an index level of 6,400 points. The six-month return expectation has been raised to 6%, corresponding to a year-end Target Price of 6,600 points, a significant increase from the previously expected 6,100 points. The twelve-month return expectation has been raised to 11%, corresponding to a level of 6,900 points for the S&P 500 Index.
Goldman Sachs pointed out in the Research Reports that this upward revision of expectations is mainly based on two major factors. First is the change in expectations for Federal Reserve monetary policy; the market generally believes that the timing for interest rate cuts will be moved forward and the extent may exceed previous expectations. Second, the strong performance of large stocks continues to provide solid support for index gains.
Currently, the S&P 500 Index is around the level of 6,230.
Goldman Sachs has moved forward its expectations for the timing of Federal Reserve interest rate cuts: possibly September.
An article earlier today from Wall Street Insight stated that economists from Goldman Sachs' research department indicated in their latest report that the Federal Reserve might lower interest rates in September, which is three months earlier than previously predicted by Goldman Sachs. David Mericle, chief U.S. economist at Goldman Sachs, stated that the probability of a rate cut in September is slightly above 50%.
The reason Goldman Sachs adjusted its interest rate cut forecast is: preliminary signs show that the impact of this year's tariff policy is slightly lower than expected, while other inflation easing factors are stronger than anticipated. In addition, senior Federal Reserve officials may also agree with Goldman Sachs economists that the impact of tariffs on price levels will be a one-time occurrence.
Additionally, there are signs of weakening in the job market. David Mericle wrote in the report: "Although the labor market still appears healthy overall, finding a job has become more difficult." Seasonal residual effects in the data and changes in immigration policy pose a downside risk to employment data in the short term.
In terms of outlook, Goldman Sachs expects the Federal Reserve will not cut rates at the July FOMC meeting, predicting a rate cut of 25 basis points in September, October, and December of 2025, and an additional 25 basis points cut in March and June of 2026. Mericle stated that if one of the motivations for cutting rates is precautionary measures, then taking action in consecutive meetings is the most natural choice.
Editor/melody