Goldman Sachs raised its outlook for the S&P 500 on July 8, 2025, becoming the second major Wall Street bank that week to lift its target for the index. The move, coming just days before big banks kicked off the second-quarter earnings season, reflected growing confidence that lower rates and resilient corporate profits could keep the rally intact even amid lingering tariff uncertainty.
The New Targets
Chief U.S. equity strategist David Kostin raised Goldman's six-month and year-end target to 6,600, up from a previous forecast of 6,100 set only in mid-May, marking the bank's second upward revision in two months. Kostin also lifted the three-month target to 6,400 and the 12-month target to 6,900. The bank kept its S&P 500 earnings-per-share growth forecast unchanged at 7% for both 2025 and 2026, suggesting the target increase was driven more by valuation and rate expectations than by a reassessment of underlying corporate profitability. It marked a notable turnaround from the spring, when Goldman had trimmed its outlook amid tariff-related growth concerns, illustrating how quickly Wall Street strategists were willing to revise views as the macro backdrop shifted.
Why Goldman Turned More Bullish
Kostin cited expectations of earlier and deeper Federal Reserve rate cuts, projections for lower Treasury yields, and continued strength among the largest U.S. companies as the key drivers behind the upgrade. On tariffs, the note pointed to inflation data and corporate surveys showing less pass-through to consumer prices than initially feared, with S&P 500 companies signalling they would offset trade costs through a mix of cost savings, supplier adjustments and selective pricing rather than absorbing the full hit to margins.
Timing Around Earnings Season
The upgrade landed in the run-up to the unofficial start of Q2 earnings season, when major banks such as JPMorgan, Bank of America, Citigroup and Wells Fargo traditionally report first. Goldman's own note acknowledged investors' apparent willingness to look past likely near-term softness in reported earnings, betting instead on the broader macro backdrop of easier monetary policy. That willingness to tolerate a bumpier earnings season, so long as the rate and yield trajectory stayed supportive, was itself a signal of how far sentiment had shifted since the tariff-driven volatility of the spring. Goldman was not alone: at least one other major bank had lifted its own S&P 500 forecast earlier the same week, underscoring a broader shift in sell-side sentiment heading into the reporting period.
What It Means for Traders
Sell-side target revisions like Goldman's do not move markets mechanically, but they do shape the narrative investors trade around, particularly heading into a dense stretch of corporate results. For traders, the combination of an upgraded index target and an approaching earnings season typically raises the stakes for individual reports: strong results can reinforce the bullish case, while disappointments risk a sharper reassessment of stretched valuations. Watching how big bank earnings land relative to expectations is often the first real test of whether upgraded targets hold up.
Daily market analysis by BCM Markets.