The Federal Reserve, which cuts benchmark rates last week, is even more excited by the stocks Goldman Sachs heading into the final quarter of this year. Strategist David Costin has increased his 2025 S&P 500 target from 6,600 to 6,800. That shows a 2% rise from Friday’s closing price of 6,664.36. The S&P 500 has been in tears this year, with an upward 13% increase as the artificial intelligence boom continues to raise stock prices and earnings expectations. Now that the Fed has resumed its easing campaign, Goldman believes he is moving further for stocks. “Our economists expect an additional 25 bp reduction in policy rate this year and a 25 bp reduction in 2026. This is pretty much in line with market expectations,” Kostin wrote in a note to clients, noting the quarterpoint movement of the Fed fund rate. “With baseline economic and Fed forecasts that are heavily reflected in market pricing, we expect revenue to be a major factor in stock prices from here. However, if the macro background is friendly, light investor positioning will be added to the tactical upside-down case of stocks.” SPX YTD BAR “Stock valuations will rise compared to history, but appear to be close to fair value based on the underlying macroeconomic and corporate background,” the strategist added. Last week’s S&P 500 reached an all-time high of 6,671.82. Tech is stubborn, with sectors rising more than 28% this year. However, there are signs of market bubbles appearing. AI leader Nvidia rose 31% in 2025, while Paramount Skydance has skyrocketed over 80% in that time. On top of that, more than 120 S&P 500 stocks have risen to at least 20%. The S&P 500’s relative strength index is a measure of whether assets are over-acquired or over-selling, and has recently sat at 73, indicating that the benchmark has been over-acquired and is susceptible to declines. However, the bull appears to be in control for now. JPMorgan’s trading desk, for example, maintains a tactical bullish call on the S&P 500, hoping that the index will reach 7,000 by the end of the year. “That being said, you might start by combining quarter-end rebalances to make money, and then finally, from the combination of macro releases, you might see some choppiness along the way. (Learn the best 2026 strategy from within NYSE with Josh Brown and others on CNBC Pro Live. Tickets and info here.)
