Prices are coming, and this is good news for the S&P 500. The question is: How big, and how much quality?
The latest job data is bad enough to force the federal reserve on its seat and reduce interest rates for the first time since late 2024, when Fed’s money rates were reduced by one percentage point.
Weakness in the widely widespread labor market, which reflects the increase in unemployment, the demobilization of workers and the least employment.
Since the encouragement of low unemployment is one of the Federal Reserve states, most Wall Street analysts are convinced that Federal Reserve Chairman Jerome Powell will change the gears and targeted functions instead of inflation in its next meeting on September 17, including Goldman Sachs.
Goldman Sachs is one of the Gold Company for Research and Analysis in Wall Street, where the roots date back to 1869.
On September 6, analysts reconsidered their S&P 500 goals for the rest of 2025 and 2026 based on price cuts.
S&P 500 works better when interest rates are turning. The Federal Reserve does not control bank lending rates, but it indirectly affects them because it determines the rate of Federal Reserve’s funds, and banks receive interest each other on reserve loans overnight.
The higher the rate, the higher the number of banks for consumer and business loans. With prices drop, bank loans are usually traced, which provides more space for male and female companies to spend and support companies, profits and stock prices.
According to the Bank of America, S&P gains 500 1.7 % On average on average during “price reduction systems”. When prices rise, they lose 0.5 % per month.
Goldman Sachs updated the S&P 500 goals of 2025 and 2026 after the unemployment report in August. Thestreet
The Federal Reserve has resisted this year’s reduction rates, for fear of doing this that would molest inflationary fires, even with the full impact of definitions to consumer prices.
There is evidence that the Federal Reserve is not a mistake to be tense, because the Consumer Prices Index (CPI) has risen since April:
July: 2.7 %
June: 2.7 %
May: 2.4 %
April: 2.3 %
However, Goldman Sachs believes that the shift in job data this summer will surpass this fear, spoiling the way for the chairman of the Board of Directors and the company to adopt interest rate discounts soon.
The unemployment rate in the United States was stuck between 4 % and 4.2 % for one year; However, Job August data showed that unemployment rose to 4.3 % – a new and higher level since October 2021, when it was 4.5 %.
“As the economy moves through the worst effects of the tariff, we expect imminent discounts in the Federal Reserve rate,” said Goldman Sachs analysts in a common agent with Thestreeet.
Analysts do not expect large pieces loaded at the forefront of half this month’s point, but they see a fixed pace of cuts throughout the end of the year until 2026.
Goldman Sachs said: “Our economic specialists expect the Federal Reserve to reduce the money rate three times this year … followed by additional quarterly discounts in 2026,” said Goldman Sachs.
S&P 500 has occupied major lines since early April, when President Donald Trump reflected the path, stopping the multiple mutual tariffs and removing the road to commercial deals.
After decreasing 19 % of its highest level in February until April 8, the S&P 500 converted 30 % from optimism that negotiations will reduce the bite of definitions, and the approval of Large tax discounts the beautiful bill It will make up for any economic blow.
The gains increased from the measurement index to the highest levels ever, as it was closed on Friday at 6481.50.
Goldman Sachs believe that the cuts in the prices of the Federal Reserve will provide enough incentive to support additional gains during the end of the year; However, the returns will be more vocal than we have seen since the spring.
“The American economy will avoid recession,” said Goldman Sachs.
In general, analysts expect the S&P 500 to increase an additional 2 % at the end of 2025, and 6 % to the middle of 2026.
“Our return expectations are compatible with 6600 price levels at the end of the year and 6900 by mid -2016,” said Goldman Sachs.
Goldman Sachs’s expectations for S&P 500 next year are rooted in their assumptions that profits will remain from the back wind.
According to FactSet, Wall Street estimates that S&P 500 will witness 10.6 % growth of profits this year and a growth of 13.6 % in 2026.
“Supporting our return expectations is our expectation of 7 % profit growth in 2026 …S&P 500 EPS will grow by +7 % in both 2025 and 2026Analysts said.
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Goldman Sachs’s futures’ futures have been estimated to have been measured more than Wall Street, as analysts wrote that “the descending reviews of consensus profit expectations lead us to expect analysts to eventually review their estimates closer to our estimates.”
Regardless, the growth growth is the lifestyle of the stock market returns, and even growth is less than a console that leads them to think that the lower resistance path until mid -2016 will be higher.
“There is still a field of trading” catching a knee “to continue the pockets of the market that was late,” said Goldman Sachs. “While the S&P 500 index is slightly lower than its height, the average component remains 11 % less than 52 weeks lower.”