Goldman Sachs: The Federal Reserve expects interest rate cuts, predicting that the S&P 500 will rise by 6% by mid-2026

Goldman Sachs strategists stated that due to the Federal Reserve's expected interest rate cuts and a re-acceleration of economic growth, the S&P 500 index is expected to rise by 2% by the end of this year and by 6% by mid-2026. The research team led by David Kostin indicated that U.S. indices typically generate positive returns during the Federal Reserve's rate-cutting cycles. Kostin's forecast for the S&P 500 index is based on an expectation of 7% corporate earnings growth in 2026. Goldman Sachs economists predict that the Federal Reserve will cut rates three times in 2025, and the U.S. economy will re-accelerate in 2026. The unwinding of AI trading is the most obvious risk to the upward trend in the stock market, and capital expenditure growth from companies such as Amazon, Meta, Microsoft, and Oracle will be key