With the market’s stunning rally pushing the S&P 500 to reach Goldman Sachs’ year-end target before the end of the first quarter, the company is presenting clients with a variety of possible future scenarios. If their targets were correct and stocks fell back, Goldman advised clients to go long on a basket of defensive stocks. “Both the expected path of the federal funds rate and the above-consensus economic growth forecast appear to have already been priced in by the market,” said David Kostin, chief U.S. equity strategist at Goldman. The S&P 500 index came off its best week since December, at 5,234.18. This is slightly higher than Goldman’s year-end forecast of 5,200 shares. The benchmark has surprised many with the scale of its artificial intelligence-powered rally, rising nearly 10% since the beginning of the year to a new all-time high. The benchmark has already outperformed most expectations, according to research from CNBC Pro market strategists. The median target for Wall Street strategists in 2024 is 5,125. .SPX YTD Mountain S&P 500 Year-to-date “Considering that just three months into the new year, the S&P 500 index has reached its year-end target, we have developed his four valuation scenarios that differ from the baseline. We will consider it,” Kostin wrote. Friday memo. His four scenarios for the market going forward are: Catch-up scenario: S&P 500 ends the year at 5,800, or rises another 11% from here, “interest rate outlook changes, not worsens” economy is needed to extend the market’s gains ” he said. The bank said the change would allow valuations of a wider range of stocks to catch up. Catchdown scenario: The S&P 500 falls to 4,500, or from here it falls 14%. This is because sales growth forecasts for seven Magnificent stocks in particular proved to be too optimistic. “Crowding risks among the largest stocks and limits on investor positioning could exacerbate the ‘catch-up’ scenario,” the memo said. “Large-cap exceptionalism” scenario: The S&P 500 ends the year at 6,000 or rises another 15% from here, but predictions for stocks like Nvidia prove correct; Investors view the S&P 500’s price-to-earnings ratio as 23:23. “Although AI optimism appears high, long-term growth expectations and valuations for TMT’s largest companies remain far from ‘bubble’ territory,” Kostin wrote. Recession risk scenario: S&P 500 index ends the year at 4500 or down 14% from here. “This is because further weak growth data could reignite investor fears and push his P/E multiple of the composite index down to 17x, which is 19% lower than it currently is,” the note said. Masu. If clients are concerned about a pullback, Goldman recommended investing in some of the defensive stocks it recommends. The 10 stocks included in the defensive basket are:
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