The year 2025 has essentially been a story for the S&P 500 that keeps rewriting in real time.
We started the year with multiple tailwinds in motion. AI spend was still humming, margins were holding up, and the index hung near the 5,800 region in early January as the bulls talked themselves into a soft landing.
Then came April’s “Liberation Day” tariff shock.
Two forgettable sessions knocked off roughly $5 trillion in U.S. market cap and sent forecasts tumbling, pushing recession chatter back into the spotlight.
But the market found its footing. Tariff rollbacks and a friendlier rates path have steadied the ship and the tape, with earnings staying resilient. By late July, the S&P 500 was printing record closes again.
Early September repeated the feat, as odds rose for more easing ahead as the Fed finally delivered its first cut.
Now comes the latest twist, where one of Wall Street’s heaviest hitters, Goldman Sachs, reset its year-end bar for the S&P 500. No fireworks, no grandstanding, but a fresh marker that acknowledges 2025’s whiplash.
Goldman Sachs raised its year-end S&P 500 target to 6,800, citing Fed rate cuts and resilient corporate earnings.
Image source: Bloomberg/Getty Images
Goldman Sachs lifts S&P 500 target as Fed turns dovish
Goldman Sachs just turned a lot more bullish on stocks.
In a fresh note, the bank just raised its year-end S&P 500 target to 6,800 from 6,600, on the back of a dovish Federal Reserve and surprisingly strong corporate earnings. That implies roughly a 2% upside from the index’s last close, which is incremental, but notable, given the market’s current state.
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Goldman didn’t stop there.
Its strategists bumped up their six- and 12-month return forecasts to 5% and 8%, translating into levels of 7,000 and 7,200. That shift feels like a sharp turn in sentiment for investors spending much of this year staring down recession chatter.
The first obvious change is that the Fed cut interest rates for the first time since December, signaling back-to-back quarter-point reductions in October and December. That pivot and signs of easing tariff pressure softened recession risks while keeping money flowing into equities.
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Earlier this year, big brokerages had gone the other way, cutting forecasts below 6,000 after Trump’s “Liberation Day” tariffs took global markets by storm. Now that those calls look mostly stale with policy winds shifting, Goldman sees enough momentum to keep the rally alive into 2026.
For more perspective, as of Sept. 22, 2025, the S&P 500 sits near the 6,660s after a fresh record close of 6,664.36 late last week. In terms of performance, the index is up about +14.4% year to date (price return) and roughly +18.2% over the past six months.
Investors should keep leaning into earnings; respect a softer Fed path
Resilient earnings are mostly doing the heavy lifting. Wall Street expects Q3 to keep edging up, with Financials leading revisions and consensus seeing mid-single-digit expansion heading into Q4.
The policy backdrop also tilted a lot friendlier with the Fed cutting a quarter-point to a 4.00% to 4.25% target range, signaling that it’s ready to ease again if the labor market keeps cooling.
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Moreover, rate futures are leaning toward a couple of more quarter-point cuts by year-end, lowering discount rates while cushioning multiples if earnings hold.
Investors need to monitor the breadth of upward EPS revisions outside Megacap Tech, and how quickly futures move to price October/December policy.
That said, here are some of the key takeaways:
- Q3 EPS growth estimates: +7.7% for the S&P 500 (vs. +7.2% on June 30); Financials drove the latest uptick.
- Q4 EPS growth estimates: +6.8% year-over-year; 2025 still modeled for double-digit EPS growth.
- Fed now: Policy rate trimmed to 4.00% to 4.25%; dot plot implies a couple more quarter-point cuts in 2025.
- Odds: Futures price 0.7% total easing in 2025, with October rate cut odds at 88% post-decision.