Goldman Sachs Joins Morgan Stanley In Predicting S&P 500 Will Hit 6,500 By 2025 End

After Morgan Stanley, Goldman Sachs has reportedly forecast that the S&P 500 would hit 6,500 by the end of 2025, driven by corporate earnings and growth in the U.S. economy.  

Goldman Sachs also projected that the ‘Magnificent 7’ stocks — Amazon.com Inc ($AMZN), Apple Inc ($AAPL), Alphabet Inc ($GOOG) ($GOOGL), Meta Platforms Inc ($META), Microsoft Corp ($MSFT), NVIDIA Corp ($MSFT), and Tesla Inc ($TSLA) — will collectively outperform the rest of the 493 index constituents next year, according to a Reuters report.

The outperformance, however, will be limited to just seven percentage points, the smallest margin in seven years, Goldman said.

"Although the 'micro' earnings story supports continued outperformance of the Magnificent 7 stocks, the balance of risk from more “macro” factors such as growth and trade policy lean in favor of the S&P 493 (companies),” it added.

The firm also highlighted tariffs and higher bond yields as risks to the broader equity market moving into 2025. "At the other end of the distribution, a friendlier mix of fiscal policy or a more dovish Fed present upside risks," the brokerage stated.

Earlier, Morgan Stanley Strategist Michael Wilson reportedly wrote in a note to clients that he expects the S&P 500 to reach 6,500 next year. “The combination of the Fed rate cutting cycle with the election result has the potential to drive broad sentiment materially higher,” Wilson wrote in a note, according to a CNBC report.

The strategist’s most optimistic bullish scenario puts the index at 7,400 while his bearish scenario places it at 4,600.

Meanwhile, BMO Capital Markets’ chief investment strategist Brian Belski reportedly expects the S&P 500 to scale 6,700 by the end of 2025.

On Tuesday morning, the SPDR S&P 500 ETF Trust ($SPY), which seeks to provide investment results that, before expenses, correspond to the price and yield performance of the S&P 500, was trading in the red as Russian President Vladimir Putin reportedly issued a warning to the U.S. that the threshold to use nuclear weapons has come down.

The new stance follows the Biden administration reportedly allowing Ukraine to use U.S. weapons for strikes inside Russia.

Retail investors on Stocktwits mirrored the skepticism prevailing in the market with the sentiment meter flipping into the ‘bearish’ territory (43/100) from ‘bullish’ a day ago.

SPY’s Sentiment Meter and Message Volume as of 10:50 a.m. ET on Nov. 19, 2024 | Source: Stocktwits