S&P 500 forecast to hit 2,100 by 2015

As the stock market reaches new highs, Goldman Sachs sees more gains ahead. Fueling the market: An improving economy, growing dividends and low interest rates.

By Charley Blaine May 21, 2013 2:30PM
© Adam Gault, OJO Images, Getty ImagesUpdated: 6 p.m. ET.

The stock market rally of 2013 has been so merry that Goldman Sachs (GS) has boosted its forecast on where it's headed over the next two years. By quite a bit.

The Wall Street giant sees the Standard & Poor's 500 Index ($INX) rising to 1,750 by year-end, a 5% gain. In 2014, their forecast is for an additional 9% gain to 1,900, with 2015 producing a 10% gain to 2,100.

For the widely watched index, that works out to a 26% increase from Monday's close over the next two years. As important, Goldman Sachs sees dividends growing 11% in 2013 and 2014 and 9% in 2015.

Goldman Sachs' forecast came as stocks finished higher on Tuesday, with the S&P 500 and the Dow Jones industrials ($INDU) closing at new highs. The Nasdaq Composite Index ($COMPX) closed above 3,500 for the first time since October 2000. The major averages ended  higher for a 19th straight Tuesday, the longest winning streak since 1968.

Why so bullish? Here are Goldman's big catalysts:
  • The projected growth in dividends.
  • The Federal Reserve is likely to keep rates at ultra-low levels for the foreseeable future.
  • The economy is improving in 2013 and will improve even more with "above-trend" growth in 2014. The momentum should carry over into 2015.
  • Price-to-earnings multiples will expand, reflecting investor confidence in the economy and continued low interest rates.
  • The big fears for 2013 -- a sizable tax increase and worries that sequestration would seriously dampen the economy -- haven't really materialized.

The market could expand even more if expected growth materializes and interest rates remain low. Goldman's base forecasts assume the 10-year Treasury yield, now about 1.94%, will rise to 2.5% by Dec. 31 and 3.75% by the end of 2015.


Goldman's forecast comes as the S&P 500 has risen 17.2% in 2013. The index is up more than 140% since the March 2009 market bottom.


Some might call the forecast optimistic at the very least, but Thomas Lee at JPMorgan Chase (JPM) is predicting the S&P 500 will end 2013 at 1,715. Other big Wall Street firms are -- so far -- standing pat with year-end forecasts that have the S&P 500 dipping in the latter half of the year.


Gina Martin Adams of Wells Fargo thinks the year-end level will be 1,390. The big issue is trying to decide how the Fed's low-interest-rate policy will affect stocks. In a CNBC interview on Tuesday, she conceded she may need to boost her estimate.


The S&P 500 ended the session up 3 points at 1,669. The index reached a new intraday  high of 1,674.93. The Dow reached a new intraday high of 15,434.50 before slipping back to 15,388. The Nasdaq added 12 points to 3,502, its best close since Oct. 4, 2000's close of 3,523.10.


The market took cheer from surprisingly strong earnings from Saks (SKS) and a disclosure that the parent of Saks Fifth Avenue is exploring strategic options, including selling the company. 


Shares of Merck (MRK) jumped $2.12 to $47.33 and an additional 42 cents after hours. The pharmaceutical giant said it will buy back $5 billion in shares in a deal worked out with Goldman Sachs.


JPMorgan Chase added 73 cents to $53.02 after a shareholder proposal split to take away the chairman's job from CEO Jamie Dimon was voted down. The shares are up 20.6% this year.


Meanwhile, investors were cheered by decent earnings from Home Depot (HD), which cited the continuing improvements in housing markets across the country. Also moving higher: Autozone (AZO), Medtronic (MDT), Biogen Idec (BIIB) and Nuance Communications (NUAN).


Gold (-GC) fell $6.50 to $1,377.60 an ounce. Platinum (-PL) dropped $26.20 to $1,458.40. Crude oil (-CL) in New York settled down off 55 cents to $96.16 a barrel. Brent crude settled down 89 cents to $103.91 a barrel.


More on Top Stocks

MSN Money on Twitter and Facebook

Like us on Facebook: MSN Money and Top Stocks

Follow us on Twitter: @msn_money and @topstocksmsn

19Comments
May 21, 2013 3:49PM
avatar
1) Tell clients to buy stock
2) Tell everyone that S&P will hit 2,100
3) Sell everything and short market at 1,900
4) Enjoy Bonuses & Profit

May 21, 2013 3:52PM
avatar
The global markets will only recover and reflect true value when EVERYONE
STOPS doing business with Goldman Sachs.  They lost both their compass
and their inner bearings long ago.

May 21, 2013 3:39PM
avatar
And I have land in Florida for you.
May 21, 2013 7:58PM
avatar
Goldman sacs went bankrupt in 2008. And now we're supposed to listen to them.
May 21, 2013 8:16PM
avatar

My BS meter just hit tilt.

This is as good a contrarian indicator you can get.

Rope the rest of the herd in and then short to clean everyone out.

When it's all inside ball, and you own the politicos on both sides, it's good to be king.

 

We're from Goldman Sachs, and we're here to help you!

 

Good luck with that one!

May 21, 2013 7:39PM
avatar
If the S&P grows from now (1672.37) at it's standard historical rate of 9%, then by the end of 2015 (2.6 years):
1672.37 x 1.09^2.6 = 2092.38

So it's no big revelation to predict is will be 2100 by 2015.  It's like saying the Yankees will have a winning record by the end of the season.

May 21, 2013 7:36PM
avatar
The IRS and Obama Administration has finally found a Constitutional Amendment they like....The 5th.....yuk yuk.
May 21, 2013 8:03PM
avatar
One says the market's going up & the other says down. The market's going to do what the market"s going to do.
May 22, 2013 3:53AM
avatar
Goldman Sachs was Ground Zero for the Financial Collapse and will be Ground Zero for the coming Global Collapse. Literally all upper Management folks at Goldman should be doing lengthy jail sentences for crimes committed. Instead, they remains the darling of Wall Street and the Kings of Corruption. Where's the outrage?
May 21, 2013 4:16PM
avatar

Has everyone else went POSITIVE now...?

And the reason, we aren't reading much Antman, have a Merryday..??

May 21, 2013 9:05PM
avatar

No , Kamlhj...There are plenty of Historical records to prove several points...

 

And then every so often, even measured in months or years; There are wrenchs thrown in the Works.

Such as what happened in 2007-2009, but there were some extra consequences, because of bad behavior (my term)....Then we have "more then a normal" correction or recession.

But still those cycles and History are there, even though they say the Markets are "always looking forward."

Also "Historically" these problems are tied to "Greed", Banks or Financial Institutions and the Wealthy.

Seldom does the "common man" or little guy come into play...Until all is lost.

And then many try to point at them...As part of the problem...Not really true in the greater scheme.

May 22, 2013 6:31AM
avatar
Dave1230 is likely the closest to being correct... This will soon come down to Goldman Sachs and how much terrorism and financial tyranny Goldman Sachs was able to inflict without actually using guns to make war. We had mass career terminations, selective salary increases, complete ridiculousness for markets and the global printing of false currency. It compromised whole nations. My guess, an attempt to create at least one Trillionaire. The Law of Unintended Consequences says- they didn't count on folks actually complaining about it. Seriously, they do not live in our world and have no business remaining in it. Time to fly, GS... and take your BS financial tyranny with you.
May 22, 2013 3:42AM
avatar
We should have 3 to 4 more years of a Bull Market, John Boehner and Mitch McConnell have failed miserably to kill the market and oust our President from office and nothing looks to be changing soon. Those who hate America and the freedom it offers to all will always fail, look for the DOW to gain a thousand points a year till 2017.
May 22, 2013 3:59AM
avatar
By 2015, Japan, Europe, and China will be in deep Recessions. By 2015, the National Deficits will again be a trillion plus a Year. By 2015, the Global Feds will have lost control of interest rates. By 2015, where the S & P closes, will be the least of folks problems or worries.

Goldman aren't the only ones' that can forecast, they however get paid huge sums to manipulate the markets, we don't nor can we manipulate markets. As the rich get richer and poor and middle-class continue to decline, that will only worsen.

May 22, 2013 8:22AM
avatar
Ya put yer money in when we tell ya, ya take yer money out when we tell ya.
May 21, 2013 8:50PM
avatar

Good point Mick, wasn't even thinking along those lines.

That was just too easy for GS..

Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

109
109 rated 1
276
276 rated 2
421
421 rated 3
629
629 rated 4
511
511 rated 5
538
538 rated 6
686
686 rated 7
507
507 rated 8
331
331 rated 9
109
109 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
KOGKODIAK OIL & GAS Corp10
UPLULTRA PETROLEUM Corp10
TAT&T Inc9
COPCONOCOPHILLIPS9
DVNDEVON ENERGY CORPORATION9
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.