Optimism about the S&P 500 is rising among Wall Street’s analysts. One notable figure, Brian Belski, Chief Investment Strategist at BMO Capital Markets, said in late June that the index has much more room to climb this year, as quoted on Yahoo Finance.

Goldman Sachs now has raised its return forecasts for the S&P 500 over the next three, six, and 12 months, driven by expectations of U.S. interest rate cuts and the continued strength of large-cap companies, as quoted on Reuters.

S&P 500 ETFs like iShares Core S&P 500 ETF (IVV Quick QuoteIVV - Free Report) , SPDR S&P 500 ETF Trust (SPY Quick QuoteSPY - Free Report) and Vanguard S&P 500 ETF (VOO Quick QuoteVOO - Free Report) added about 6.2% so far this year. The bank now anticipates a 3% gain over the next three months, targeting a level of 6,400.

For the six-month horizon, it projects a 6% increase, raising its year-end target to 6,600 from the previously estimated 6,100. Over the next 12 months, Goldman sees an 11% rise, with the S&P 500 expected to reach 6,900.

Drivers of the Upward Revision

The analysts of Goldman attributed the upgrades to several key factors: expectations of earlier and more significant Federal Reserve rate cuts, lower bond yields than previously forecast, and persistent strength in large-cap fundamentals.

Additionally, they noted that investors appear willing to look past likely short-term earnings softness. As a result, Goldman revised its forward price-to-earnings (P/E) ratio forecast for the index to 22 times, up from 20.4 times.

Market Resilience and Tariff Concerns

Recent strength in the U.S. labor market has supported broader investor confidence, helping push Wall Street to record highs last week. This comes after a market pullback in April, following former President Donald Trump's “Liberation Day” tariff announcements.

However, optimism has returned amid hopes for trade deals and potential Fed easing. Goldman noted that recent inflation data and corporate surveys have shown less tariff pass-through than previously expected. Still, they believe the impact of tariffs will unfold gradually, with large-cap firms somewhat shielded in the near term by inventory buffers.

Steady EPS Forecasts Amid Uncertainty

Despite these evolving dynamics, Goldman Sachs has maintained its earnings-per-share (EPS) growth forecasts for the S&P 500 at +7% for both 2025 and 2026. While confident in these figures for now, analysts acknowledged that risks remain on both the upside and downside. They plan to reassess their projections following the second-quarter earnings season.

Total S&P 500 earnings for the June quarter are expected to be up +5.0% from the same period last year on +4.0% higher revenues. Negative revisions to Q2 estimates have stabilized in recent weeks.

Bottom Line

We expect stronger S&P 500 gains ahead. With Q2 earnings projected to rise +5.0% on +4.0% revenue growth and estimate revisions stabilizing, confidence in near-term market resilience is growing—though risks remain.