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Goldman Sachs Raises Year-End S&P 500 Target to 5,200

According to Reuters, Goldman Sachs has raised its year-end target for the benchmark S&P 500 to 5,200, reflecting roughly a 4% upside from current levels. This optimistic projection is based on an improved earnings outlook for the index companies.

The brokerage previously projected the index to end 2024 at 5,100, before raising the forecast from 4,700 in December. This decision was influenced by cooling inflation and expectations of the U.S. central bank easing rates in the year.

Goldman’s forecast of an 8% profit increase for S&P 500 companies this year is fuelled by an improved U.S. economic outlook and stronger mega-cap profit margins.

A lead strategist at Goldman Sachs, David Kostin, stated, “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.”

Kostin also expects the earnings strength of mega-cap stocks, especially those in the Magnificent 7, to boost aggregate S&P 500 profits in 2024. The growth in artificial intelligence and consumer strength is expected to propel revenue growth alongside margin expansion, Kostin added.

He anticipates the Magnificent 7 stocks to post the strongest earnings growth among S&P 500 sectors.

Furthermore, operating margins for the rest of the index should also improve, albeit to a “much smaller” degree, as input costs, such as wage growth, continue to moderate alongside robust sales growth and only modest further price disinflation, Kostin said.

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(Reporting by Roshan Abraham in Bengaluru; Editing by Dhanya Ann Thoppil)

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