S&P 500 at 6000? Mid-caps a better bet
David Kostin, Goldman Sachs' chief U.S. equity strategist, anticipated the $S&P 500(.SPX)$ to trade around 6000 points in a year's time. This projection implies a roughly 5% upswing from Monday's record-setting close of 5719 points, with the index already soaring about 20% this year.
However, Kostin cautioned investors about potential market turbulence in the coming weeks, noting that historically, this period tends to see heightened volatility and share price dips.
The election itself brings uncertainty, which could be a short-term concern. Typically, post-election, the clouds disperse, and stock markets often rally.
Since his initial 2024 forecast late last year, Kostin has revised his S&P 500 target upwards three times, reiterating a year-end target of 5600, citing election-induced short-term volatility. Wall Street analysts currently average their year-end targets for the S&P 500 around 5523 points.
Meanwhile, Scott Rubner, Managing Director of Goldman Sachs Global Markets, predicts the S&P 500 could hit 6000 points as early as later this year. Acknowledging potential volatility ahead, he foresees a "FOMO (Fear Of Missing Out) year-end rally" post-election.
Kostin sees opportunities in mid-cap stocks, highlighting their "long-term outperformance over large-caps and small-caps," coupled with lower P/E ratios and higher value.
Mid-caps also shine in the three and twelve months following interest rate cuts. Our current focus is squarely on mid-caps, an overlooked segment by many portfolio managers. This could be a standout performer in the coming year.
Adding to the optimism, Denis Coleman, Goldman Sachs' CFO, stated on Tuesday that the Fed's 50 basis point rate cut has set the U.S. economy on a path for a soft landing. As we enter 2025, this move is expected to ease market backlogs and boost overall market activity.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
