(Bloomberg) — Goldman Sachs Group Inc. strategists are sticking with their year-end S&P 500 forecast degree of 5,200, however have a state of affairs through which tech megacaps lead the index up one other 15%.Most Learn from BloombergThe agency is sticking with its present prediction as a result of the federal funds fee path and economic-growth trajectory are totally priced by markets, strategists led by David Kostin wrote in a observe. Because the outlook for valuations was unsure, the analysts explored potential eventualities exterior of the bottom case.A type of is the concept valuations of megacap tech corporations could proceed to broaden, sending the gauge to six,000 by year-end and reaching a ahead price-to-earnings ratio of 23, they mentioned.“Though AI optimism seems excessive, long-term progress expectations and valuations for the most important TMT shares are nonetheless removed from ‘bubble’ territory,” the strategists wrote.The S&P 500 is up virtually 10% this yr and closed Friday at 5,234.18. That’s already left many strategists’ year-end forecasts within the mud. The mixture of wholesome US financial knowledge, expectations the Federal Reserve will minimize charges and optimism about synthetic intelligence shares are among the many elements which have helped the gauge advance.A big a part of the market stays weighed down by issues of “high-for-longer” charges and an elevated value of capital as traders search high quality attributes, Goldman famous. That’s one space the place a change may assist shares go greater.“A shift within the rate of interest outlook with no deterioration within the economic system is critical for the market rally to broaden,” the strategists mentioned.Goldman gave estimates of the place the index could also be headed in a number of different eventualities. In a single, a “catch-up” to pre-pandemic 2018 valuations may see the gauge finish the yr at 5,800, they mentioned.Story continuesThe different two are rather more bearish — a “catch-down” state of affairs the place sales-growth estimates show too optimistic, or the place traders begin to value within the threat of a recession. Both of those may see the S&P 500 finish the yr at 4,500, the strategists mentioned.Most Learn from Bloomberg Businessweek©2024 Bloomberg L.P.