Goldman Sachs has raised its forecast for the S&P 500 index to 6,500 points over the next 12 months, up from its previous estimate of 6,200 points. This adjustment comes following a tariff reduction agreement between the United States and China, which has bolstered optimism regarding economic growth and the avoidance of a recession.
Goldman Sachs strategists, led by David Kostin, expect gains of about 11% for the S&P 500 compared to Monday's close. However, they warned against excessive optimism, noting that already high market valuations and the uncertainty surrounding slowing economic growth and profits could limit the rise in multiples in the coming months.
Despite the easing concerns over tariffs, Goldman Sachs sees particular opportunities in the technology sector, where major companies are expected to benefit significantly. However, broader profit outlooks remain uneven, and they expect tariffs in 2025 to remain much higher than in 2024, which could pressure profit margins.
Goldman Sachs advises investors to focus on companies with strong pricing power that can maintain their profit margins amid rising production costs.
