Expectations for Further Rate Cuts and Strong Corporate Earnings
Goldman Sachs, the American investment bank, raised its year-end forecast for the S&P 500, the benchmark index of the U.S. stock market, by 2%, from 6,600 to 6,800, Reuters reported on September 21 (local time).
In a report released on September 19, Goldman Sachs also revised its 6-month and 12-month return estimates upward to 5% and 8%, respectively. This implies that the index is expected to reach 7,000 and 7,200 over those periods.
The upward revision was attributed to the Federal Reserve’s dovish (monetary easing) stance and robust corporate earnings. On September 17, the Federal Open Market Committee (FOMC) lowered the interest rate by 0.25 percentage points. According to the accompanying dot plot of interest rate projections, the Fed indicated the possibility of two additional 0.25 percentage point cuts at its meetings in October and December this year.
Back in April, when President Donald Trump announced reciprocal tariffs against the world, concerns about an economic recession grew and global stock markets plunged, prompting major securities firms including Goldman Sachs to lower their targets to below 6,000. However, with expectations for tariff reductions and Fed rate cuts, the U.S. stock market has recently reached record highs.
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