S&P 500 Index forecast: Goldman Sachs, Citi, Yardeni, Morgan Stanley

The S&P 500 Index is having a strong performance this year as it continues to reach new all-time highs each day. It soared to a record high of $7,580 last week, up by 20% from its lowest point this year, meaning that it is now in a bull market. 

Wall Street analysts are bullish on the S&P 500 Index

The S&P 500 Index has surged this year, and Wall Street analysts believe that it has more upside to go. Yardeni Research is one of the most bullish companies with a target of $8,250, representing a 9% upside from the current level. 

Oppenheimer predicts that the S&P 500 Index will jump to $8,100, while Goldman Sachs, Citi, and Morgan Stanley see it rising to $8,000, $7,900, and $8,000, respectively. 

There are several reasons to remain bullish on the S&P 500 Index. First, data shows that ETF inflows in the fund are soaring this year. Vanguard’s VOO has added over $64 billion this year and is slowly nearing the $1 trillion assets mark. With a fee of 0.03%, this fund will start making the company over $300 million a year. 

Second, American companies are reporting strong financial results this year. 97% of all companies in the S&P 500 Index have already released their financial results, with the average earnings growth being 28.6%, the highest rate since Q4’21. A good example of this is Nvidia, the biggest American company, whose revenue growth surged by 85% in the first quarter of this year.

Third, despite the strong earnings growth, there are signs that the index is not all that expensive. FactSet data notes that the index has a forward price-to-earnings (PE) ratio of 21.2, slightly higher than the five-year average of 19.9. It is also slightly higher than the ten-year average of 18.9. 

Additionally, there are signs that the US-Iran war will end soon. The two sides are negotiating a 60-day ceasefire that will reopen the Strait of Hormuz. As a result, crude oil prices have plunged in the past few days, with Brent and the West Texas Intermediate (WTI) falling to $92 and $87, respectively. 

The falling oil prices retreat has pushed US bond yields downwards. The ten-year yield dropped from the year-to-date high of 4.687% to the current 4.437%, while the two-year yield has fallen from 4.18% to 4% today. Also, the 30-year yield dropped below the year-to-date high of 5.18% to 4.97%. Falling bond yields are a sign that analysts expect the Federal Reserve will not hike interest rates this year. 

S&P 500 Index technical analysis

SPX Index chart | Source: TradingView

The daily chart shows that the SPX Index has surged in the past few months from a low of $6,310 in March to the current $7,580. It crossed the important resistance level at $7,000, the highest point in January this year. 

The index has remained above all moving averages. Also, the Relative Strength Index (RSI) has continued rising and currently stands at 73. Therefore, the most likely scenario is where it continues rising, potentially to $8,000. 

Still, there is a likelihood that the index may pull back briefly as some investors book profits. If this happens, the index may drop to $7.250 and then resume the uptrend in the long-term.