Goldman Sachs Predicts 10% S&P 500 Gain by Year End

Goldman Sachs, one of the world's largest financial institutions, has recently expressed a bullish outlook on the stock market, predicting a rally in the coming year. The firm's chief US equity strategist, David Kostin, stated in an interview that the equity market traditionally trades more on "soft data" than on "hard data," and that some of the weak soft data may be turning around.

Kostin acknowledged that in the short term, US equities may face downside risks due to tariff-driven uncertainty. However, he expects the S&P 500 to perform around 10% by the end of the year. He also emphasized that a recession is not part of the bank's base case forecast, indicating a positive economic outlook.

According to Kostin, the economy is likely to continue growing, with earnings growth projected at 7% this year and another 7% next year. This growth is expected to lift the market to around 6500, which is roughly a 10% increase from current levels.

Kostin also highlighted several variables and signposts that investors should be looking at, including upcoming hard data, uncertainty around earnings, and the end of the blackout period for company share repurchases. He noted that these factors will provide more clarity on the market's direction in the coming months.

Goldman Sachs' prediction of a stock market rally is based on their analysis of the current economic conditions and the firm's confidence in the economy's continued growth. The firm's bullish outlook is supported by their assessment of the underlying real economy, which appears to be improving.