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.
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.
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2) Tell everyone that S&P will hit 2,100
3) Sell everything and short market at 1,900
4) Enjoy Bonuses & Profit
STOPS doing business with Goldman Sachs. They lost both their compass
and their inner bearings long ago.
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!
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.
Has everyone else went POSITIVE now...?
And the reason, we aren't reading much Antman, have a Merryday..??
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.
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.
Good point Mick, wasn't even thinking along those lines.
That was just too easy for GS..
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The solid report comes a month after the retailer closed all of its Canadian operations.
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