Goldman Sachs has recently unveiled a compelling forecast predicting that the S&P 500 index is poised to rise to an impressive 6500 points by the conclusion of this year. This anticipated growth is primarily attributed to the robust expansion of corporate earnings. Their analysis projects an 11% increase in earnings per share for 2023 and a further 7% increase anticipated for the following year.
Furthermore, the price-to-earnings ratio is expected to stabilize around 21.5 times before the year draws to a close. In addition to this bullish outlook, Goldman Sachs highlighted that the previous year saw the S&P 500 achieving a remarkable total return of 25%. This achievement is significant as it marked the second consecutive year with returns surpassing the 20% mark.
Notably, the last time such a streak of consecutive high returns was observed was in 1998 and 1999. Compellingly, nearly half of last year's stellar annual returns have been attributed to just five defining stocks: Nvidia, Apple, Amazon, Alphabet, and Broadcom. These companies have been key players, driving growth in the index and demonstrating the potential for continued strength in the overall market as corporate earnings continue to flourish..