Goldman Sachs expects the S&P 500 index to reach 6270 points by the end of the year

The S&P 500 has closed 46 times this year. According to data from Goldman Sachs Group's trading department, this rise is expected to continue until the last few months of 2024.

Scott Rubner (Scott Rubner), the bank's managing director of global markets and a tactical expert, estimates that the S&P 500 index, the benchmark for US stocks, may “far exceed 6,000 points” this year. Based on his calculation of data from 1928, the median historical return of the S&P 500 index from October 15 to December 31 was 5.17%. In election year, this figure was even higher, slightly above 7%, which meant that the S&P 500 ended the year at 6270.

Statistics compiled by Bloomberg seem to support a bullish view of the fourth quarter. In the nearly century-long history of the stock composite index, only the fourth quarter of 25 years since 1928 showed negative earnings. However, historical returns vary widely: in 1998, the yield was 21%, while in the last period of 1929, US stocks fell 29%, which is unbearable.

Rubner had anticipated a sell-off before the US presidential election, but now he has changed his mind. In late September, he discovered that investors had sold long positions and bought the spread of put options on the S&P 500 index due to concerns about recent unfavorable seasonal and technical positions. However, this sentiment changed after rising US stocks forced fund managers to join the buying ranks.

In a note to clients on Tuesday, Rubner wrote: “The sharp fall in the stock market has been cancelled, the year-end rebound is beginning to resonate with customers, and institutional investors are being forced to enter the market.” He added that professional investors are increasingly worried that their performance will fall seriously below the benchmark.

According to Rubner, when the share buyback window is reopened on October 25, US companies will resume their important role as stock buyers.

Mutual funds that end their fiscal year at the end of October are likely to shift from sales for tax reasons to potential purchases, and the S&P 500 has risen 22% this year. Traditionally, families also buy stocks net in November, he pointed out.

Trend-following systemic funds are also potential buyers. Volatility-controlled funds usually buy stocks during the quiet period, but these funds are likely to resume buying after the November election. He wrote, “If the volatility restarts after the election, then there will be room to rise.”

Furthermore, positions in the options market also indicate “the health of the rebound,” Rubner wrote, referring to an increase in gamma value — the gamma value is an indicator that measures the volatility of derivatives. When traders buy on dips, the gamma value can act as a buffer to the market.