Goldman Sachs Lifts 2024 S&P 500 Target to 5,200 on Upbeat Profit Outlook

• Goldman Sachs raised its year-end target for the S&P 500 to 5,200, up from the previous forecast of 5,100, representing a 4% increase from current levels. This adjustment was attributed to expectations of lower interest rates and declining inflation throughout 2024.
• The firm predicted an 8% profit increase for S&P 500 companies in 2024, citing improved economic conditions and stronger profit margins for mega-cap firms like the "Magnificent 7." Lead strategist David Kostin highlighted factors such as global GDP growth, a weaker dollar, and advancements in artificial intelligence driving revenue growth and margin expansion.
• Despite the positive outlook, Goldman Sachs anticipates that the Magnificent 7 stocks will lead the earnings increase among S&P 500 sectors, with operating margins expected to rise for other index members to a lesser extent, contingent on sustained sales growth and controlled input expenses like wage growth.

Citing a better earnings forecast for the index businesses, Goldman Sachs boosted its year-end goal for the benchmark S&P 500 to 5,200, representing a roughly 4% upside from current levels.

The firm had previously predicted that the index would close 2024 at 5,100, but it had raised its estimate from 4,700 in December due to concerns about declining inflation and anticipations that the US central bank would lower interest rates throughout the year.

Goldman Sachs predicted an 8% rise in profits for S&P 500 companies this year, citing an improved economic outlook in the United States and stronger profit margins for mega-cap firms.
David Kostin, lead strategist at Goldman Sachs, stated, "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."
Kostin emphasized the anticipated earnings boost from mega-cap stocks, particularly those in the "Magnificent 7," which are expected to drive overall S&P 500 profits in 2024. He also highlighted the expected revenue growth and margin expansion driven by advancements in artificial intelligence and consumer strength.

Among the S&P 500 sectors, he anticipates that the Magnificent 7 stocks will report the highest earnings increase.

Operating margins should rise for the remaining index members as well, but to a "much smaller" extent, according to Kostin, as long as strong sales growth is accompanied by modest additional price disinflation and input expenses, such wage growth, continue to drop.

Market Manipulation?

Between February 2009 and April 2023, Goldman Sachs allegedly failed to include warrants, rights, units, and specific OTC (over-the-counter) equity securities in nine surveillance reports intended to identify possible instances of manipulative proprietary and customer trading, according to the Financial Industry Regulatory Authority's (FINRA) Department of Enforcement.

FINRA claims that Goldman overlooked securities in the reports for a "prolonged period," which is roughly equivalent to two to more than twelve years.

In a surveillance report intended to identify possible wash trades, the regulatory authority discovers that Goldman excluded rights and units from October 2010 to April 2022 as well as warrants from October 2010 through March 2021.

In its surveillance reports from February 2009 to April 2018, the banking behemoth allegedly omitted warrants, rights, units, and some OTC equity securities that may have exposed possible practices of marking the open and marking the close, a form of market manipulation intended to affect an asset's price at the start or end of a trading session, according to FINRA.

FINRA claims that Goldman was unable to do supervisory reviews for potential instances of market manipulation because of the errors in the reports.