Introduction

Goldman Sachs has revised its year-end target for the S&P 500 to 6,200 from 6,500, reflecting increased uncertainty in the markets. The adjustment follows a 9% decline in the index, largely driven by weakness in the 'Magnificent 7' stocks, which Goldman now dubs the 'Maleficent 7'.

Key Factors Behind the Revision

1. Market Decline & Hedge Fund Positioning

• The S&P 500 fell 9% from its all-time high, led by a 14% drop in the 'Magnificent 7' stocks.
• The market downturn was driven by:
  • Policy uncertainty in the U.S.
  • Economic growth concerns.
  • Hedge fund positioning unwinds.

2. Valuation Adjustments

• The P/E ratio of the 'Maleficent 7' fell from 30x to 26x.
• The equal-weighted S&P 500 index (SPW) declined 6% in the same period.
• The P/E ratio of SPW dropped from 17x to 16x, now 8% below its November peak.

3. Earnings Growth Outlook

• Goldman trimmed its 2025 EPS forecast to $262 from $268 (-2.2%).
• 2026 EPS estimate was also revised down to $280 from $288 (-2.8%).
• 2025 EPS growth forecast lowered to 7% from 9%.

Goldman's S&P 500 Forecast

Despite the downward revision, Goldman expects an 11% price gain from current levels through year-end, maintaining a cautious but constructive outlook.

Stay Updated on Market Trends

For real-time earnings and valuation insights, check:

• S&P 500 Historical Constituents API
  Analyze the historical performance of S&P 500 companies.

• Earnings Calendar API
  Track upcoming earnings reports for insights into corporate profitability.

Conclusion

Goldman's revised S&P 500 target reflects market volatility and economic uncertainties. However, their forecast for an 11% upside signals potential recovery if macroeconomic risks stabilize. Investors should watch policy decisions, earnings trends, and valuations closely in the coming months.