Proactive Investors - The S&P 500 is seen reaching 5,600 points by the end of the year by analysts at Goldman Sachs Group Inc (NYSE:GS, ETR:GOS), who have lifted their forecast for the index for the third time since December.
The analysts wrote in a note that they have raised their year-end target for the index from 5,200 citing strong earnings growth from five mega-cap tech stocks and a higher fair value price-to-earnings ratio multiple.
Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA), Google parent Alphabet (NASDAQ:GOOGL), Amazon (NASDAQ:AMZN) and Meta (NASDAQ:META) Platforms have collectively gained 45% and now make up 25% of the S&P 500 equity cap, they wrote.
"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),” they wrote.
The upcoming US election in November remains a key risk to the S&P 500 level, Goldman Sachs’ analysts warned.
However, they noted that index volatility increases before the election during election years but typically subsidies following the election and rebound to an even higher level.
The S&P 500 on Monday was on track for a new record close, trading up 0.2% at 5,441 points.