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Highlights
- S&P 500 Index forecasted to climb to 6,500 by the close of 2025.
- Economic growth and stable bond yields are key drivers.
- Event risks could influence market performance in both directions.
Goldman Sachs' chief equity strategist, David Kostin, has projected the S&P 500 Index to reach 6,500 by the end of 2025. This revised outlook reflects a 10% rise from current levels and builds on his prior 12-month forecast of 6,300. The new prediction aligns with similar projections for US equities from other notable market strategists.
The upward revision stems from expectations of continued economic growth in the United States, coupled with stable corporate earnings and bond yields. Kostin noted in a recent analysis that the combination of these factors supports a positive market trajectory. The S&P 500 has already gained 24% this year, driven in part by the surge in artificial intelligence-related stocks such as Nvidia (NASDAQ:NVDA). The index remains near its historical peak, last achieved in November following significant political developments.
While the baseline outlook suggests further gains, Kostin highlighted potential risks that could influence market performance. Positive catalysts, such as favorable fiscal policies or a more accommodative Federal Reserve, could boost equity markets further. Conversely, headwinds such as the impact of proposed tariffs or rising bond yields may introduce downward pressure.
Kostin emphasized that current forecasts account for a balance of these risks. For instance, the potential effects of Trump-era tariff proposals and corporate tax adjustments have been factored into Goldman’s earnings-per-share (EPS) estimates. Notably, the median estimate for the S&P 500 from other Wall Street strategists places the index at 6,000 by the end of 2025, slightly below Goldman Sachs’ target.
The strategist also recommended capitalizing on periods of low market volatility to explore hedging strategies or positioning for equity market upside. This approach, he suggested, could provide opportunities for managing portfolio risk amid evolving market conditions.
As the year progresses, the interplay of macroeconomic factors, policy decisions, and corporate performance will play a significant role in determining whether the S&P 500 achieves its anticipated level of 6,500 by the close of 2025.
