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The S&P 500 trades at 5,234, up 33% in the last year. One group of analysts at Goldman Sachs believes it could jump to 6,000 by the end of 2024.
According to Bloomberg, a Goldman group of analysts led by David Kostin made a base case that the S&P 500 would end the year where it trades today. However, his team made another case for a run to 6,000. That case, as most people would expect, is that the mega-cap tech companies that have driven the market higher will continue to do so.
Kostin’s group base case has “baked in” some expected activities. The Fed will cut rates three times. The market will continue to find companies with AI connections attractive.
However, for the market to rise more, rate cuts could be deeper than expected as the Fed decides to help what is already a robust economy. Additionally, the economy could get even more robust. It has already dodged forecasts of a recession last year and in early 2024. Employment has been strong as monthly jobless rates have been about 3.7%.
But, if 6,000 is possible, shares in Nvidia (NASDAQ: NVDA) and Microsoft (NASDAQ: MSFT) would need to advance rapidly. More important shares in companies, notably Apple (NASDAQ: AAPL) and Alphabet (NASDAQ: GOOG), would have to “catch up” partially with the market leaders. Nvidia is up 90% this year. The Nasdaq is higher by 9%. Apple is down 10%, and Alphabet has only risen 8%.
One reason 6,000 is a stretch is that the cases Apple and Alphabet stocks could do much better need to be stronger. Apple faces slow iPhone sales, a federal antitrust lawsuit, and a lack of AI products. Alphabet’s AI offers have not been well accepted, and the digital ad market has been less than healthy.
The argument for the S&P 500 at 6,000 at year-end probably relies on the chance that just a few companies can turn around.
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