Goldman’s S&P 500 Target Looks More Reachable After the Latest Rally

Musk just raised $75 billion. Guess what he needs to buy. (From Behind the Markets)

The markets have chopped around and traded mostly sideways over the past month, with the S&P 500 remaining mostly flat after bouncing back on June 11 after President Donald Trump announced that he was halting attacks on Iran.

But prior to his social media post, the benchmark index was on the verge of a pullback, having fallen 4.5% from its one-month high. Conditions remain volatile, though, with the Chicago Board Options Exchange’s CBOE Volatility Index (VIX) reaching its highest level since early April.

But that has not dissuaded Goldman Sachs from maintaining its bullish outlook. In fact, in late May, the investment bank and financial services firm actually raised its 2026 year-end price target for the S&P 500 from 7,600 to 8,000. From where the benchmark index is trading today, that suggests potential upside of about 6% for the rest of the year.

Record Highs Are Almost Always Followed by Selloffs

The strong performance of the S&P 500 is being driven by a large number of stocks having recently hit their 52-week highs. Meanwhile, the market rotation out of higher risk tech names and into overlooked—but outperforming—sectors like industrials and materials is driving a broad and sustainable rally.

That materialized in Q1 2026 earnings. Roughly 85% of companies in the index reported earnings beats, with about 80% of them surpassing revenue expectations. That broadening of earnings growth is a trend Wall Street expects to continue throughout the remainder of the year and into next.

Goldman’s decision to raise its year-end target for the S&P 500 is based on numerous factors, but one major contributor is that its strategists believe earnings per share (EPS) will continue to grow throughout 2026. The bank projects EPS of $340 this year, which would mark a 24% increase over the prior year, and $385 for 2027, which would mark a growth of 13%.

Additionally, a 6% gain from current prices does not seem that far-fetched. Q1 earnings season is in the rearview mirror, with companies still having three quarters of earnings to report.

While the war in Iran pushed oil prices higher and lifted the energy sector so far this year, crude has started to pull back after an initial U.S.-Iran agreement to extend the ceasefire and reopen the Strait of Hormuz. If the agreement holds, lower energy costs could help relieve inflation pressure and support investor risk appetite.

Other tailwinds that contributed to numerous all-time highs this year remain in place, including:

• The global memory chip shortage, which is expected to last at least until 2027, is demonstrating that the AI trade has staying power.

• Consumer spending is proving to be resilient despite inflation escalating to a three-year high.

 

Essentially, the market’s macro backdrop could continue pushing the S&P 500 higher. The current selloff of AI and software names is a natural part of a healthy cycle, and the index was overbought heading into June and due for a pullback. Structurally, the bull run remains intact. But there are additional catalysts that will contribute toward the benchmark’s run at 8,000.

IPO Euphoria Will Continue to Drive Institutional and Retail Inflows

IPO fever has also gripped the markets.

Elon Musk’s SpaceX (NASDAQ: SPCX) went public on June 12 after pricing its IPO at $135 per share, giving public-market investors direct exposure to one of the most closely watched private companies in the world. The successful debut placed SpaceX among the largest publicly traded companies and gave the IPO market a major validation point.

SpaceX’s debut could help clear the path for the next cohort of mega-cap AI and technology companies eyeing public listings. OpenAI announced on June 8 that it had confidentially submitted a draft S-1 to the U.S. Securities and Exchange Commission, while Anthropic filed on June 1. Both filings point to a public-market pipeline that could keep IPO enthusiasm alive beyond SpaceX.

While neither company is likely to fetch SpaceX’s valuation, the revival in IPO activity matters for the broader market. Large public debuts can draw in new capital, reinforce investor confidence in growth stocks, and give Wall Street fresh benchmarks for valuing companies tied to artificial intelligence, cloud infrastructure, and next-generation technology.

In addition, Nasdaq recently updated its Nasdaq 100 methodology to allow certain large new listings to qualify for faster entry, while FTSE Russell introduced a fast-entry rule that allows eligible large IPOs to join Russell U.S. indexes after the fifth trading day. MSCI already had fast-track rules for large IPOs in place. If SPCX qualifies for early inclusion, it could pave the way for other companies—like OpenAI and Anthropic—to bypass historical seasoning rules and be fast-tracked into major indices.

It is worth noting, however, that SpaceX is not getting the same fast-track path into the S&P 500, where S&P Dow Jones Indices kept its existing seasoning, financial viability, and minimum investable weight factor requirements in place.

Investor Confidence Is Being Tested, Not Broken

Investor sentiment is not uniformly bullish, but that may actually strengthen the case for a measured year-end rally. The latest American Association of Individual Investors sentiment survey shows individual investors are still cautious, with bullish sentiment below its historical average and bearish sentiment elevated. The Fear & Greed Index has also remained in “fear” territory, suggesting the market has not returned to the kind of broad euphoria that often marks a more fragile rally.

Between AI’s CapEx supercycle, ongoing and projected broad earnings growth, and the rush of IPOs coming to market, it remains probable that the S&P 500 will be able to hit Goldman Sachs’ year-end projection.

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