BY RAE WEE
SINGAPORE— Goldman Sachs has raised its three-, six- and 12-month return forecasts for the S&P 500, citing expectations of US interest rate cuts and continued fundamental strength of major large-cap stocks as key drivers of its positive outlook.
The Wall Street bank has revised its S&P 500 return forecasts, projecting a 3 percent gain over three months and an 11 percent gain over 12 months, targeting index levels of 6,400 and 6,900, respectively.
“Earlier and deeper Fed easing and lower bond yields than we previously expected, continued fundamental strength of the largest stocks, and investors’ willingness to look through likely near-term earnings weakness support our revised S&P 500 forward P/E forecast of 22 times from 20.4 times,” analysts said in a note late on Monday.
For the index’s six-month return, Goldman Sachs has raised its forecast to +6 percent, projecting a year-end level of 6,600, and up from its previous estimate of 6,100.
Wall Street closed at record highs last week, buoyed by signs of resilience in the country’s labor market, which defied investor fears of a slowing economy.
After a selloff in April following US President Donald Trump’s “Liberation Day” tariff announcements, stocks have rebounded as hopes for trade deals and potential Federal Reserve rate cuts eased investor uncertainty.
“Recent inflation data and corporate surveys indicate less tariff pass-through so far than we expected,” the analysts said.
