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The
brokerage had previously projected the index to end 2024 at
5,100, before raising the forecast from 4,700 in December, on
cooling inflation and expectations of the U.S. central bank
easing rates in the year.
Goldman on Friday forecast an 8% profit increase for S&P 500
companies this year, fuelled by an improved U.S. economic
outlook and stronger mega-cap profit margins.
"We expect strong world GDP growth and a slightly weaker dollar
will support EPS, while lower rates and lower oil prices will be
a slight drag," said David Kostin, lead strategist at Goldman
Sachs.
Kostin expects the earnings strength of mega-cap stocks,
especially those in the Magnificent 7, boosting aggregate S&P
500 profits in 2024. The growth in artificial intelligence and
consumer strength is expected to propel revenue growth alongside
margin expansion, Kostin added.
He expects the Magnificent 7 stocks to post the strongest
earnings growth among S&P 500 sectors.
For the rest of the index, operating margins should also
improve, but to a "much smaller" degree, as input costs, such as
wage growth, continue to moderate alongside robust sales growth
and only modest further price disinflation, Kostin said.
(Reporting by Roshan Abraham in Bengaluru; Editing by Dhanya Ann
Thoppil)
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