Strategist Predicted Higher S&P 500 Close by End of 2026
Goldman Sachs forecasts index gains supported by strong third-quarter earnings growth.
Updated on Oct. 6, 2026 in Stock Markets
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Goldman Sachs strategist Tony Pasquariello projected that the S&P 500 will conclude 2026 at a higher value than its current position. This outlook, shared in a client desk note on October 5, 2026, follows a period where the index remained within 0.5% of its all-time high.
Why it matters
The bullish projection relies on robust third-quarter earnings and economic growth that may offset recent headwinds like the surge in bond yields seen in September 2026. Understanding these growth drivers is vital for households evaluating the sustainability of their long-term savings and equity-heavy retirement portfolios.
The S&P 500 now carries a price-earnings multiple of 19 times, down from 23 times a year ago. Investors should note that AI infrastructure stocks currently account for 50% of recent earnings growth.
The players
Tony Pasquariello
A strategist at Goldman Sachs who analyzes market positioning and sector-specific earnings contributions.
Goldman Sachs
A global financial institution providing investment research, banking services, and market outlooks to clients.
Nvidia
A technology company specializing in hardware components that serve as a primary engine for current index earnings growth.
Micron
A semiconductor manufacturer contributing significantly to earnings growth alongside major AI-focused tech firms.
The details
The market's current 19 times price-earnings multiple aligns with the average of the last decade, suggesting a return to more standard valuations despite a recent surge in bond yields. Earnings expansion is heavily concentrated, with tech and energy sectors driving 80% of total growth, and Nvidia and Micron alone contributing one-third. The strategist's analysis incorporates technical indicators such as sentiment and capital flows to assess the broader economic health of these contributors.
Timeline
April 2026: Median AI stock forward P-to-E reached 32 times.
September 2026: Bond yields experienced a notable surge.
October 5, 2026: Goldman Sachs distributed the desk note to clients.
End of 2026: Target timeframe for the projected S&P 500 index growth.
Money Landscape
The current 19 times price-earnings multiple reflects a return to the historical 10-year average after valuations previously hit 23 times. This normalization occurs even as tech and energy sectors continue to account for the majority of index earnings expansion.
Households with retirement savings tied to index-based investments should review their overall asset allocation to ensure it remains consistent with their risk tolerance. Investors should discuss the implications of sector concentration with a qualified financial professional.
The takeaway
The market appears to be recalibrating toward historical valuation norms while relying on a narrow set of tech and AI leaders for growth. Readers should maintain a long-term perspective and consider reviewing their portfolio diversification with a financial professional during periods of bond market volatility.
Further reading
For more on index performance and market trends, visit our Stock Markets section.
Source note: This article includes information reported by Morningstar.
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