No One Saw This Coming: Goldman Sachs Predicts Faster Fed Cuts, S&P 500 Rockets Higher

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In a haze of cigar smoke and whispers echoing across Wall Street, the somber faces at Goldman Sachs have, with as much bravado as one can muster after a fourth cup of tepid office coffee, hoisted their S&P 500 forecast above the heads of the bewildered crowd—not unlike a magician revealing a dove from a hat, if the magician were an economist and the hat were filled with spreadsheets.

The esteemed or perhaps simply indefatigable economists, hunched over their ever-dwindling stacks of economic reports, now muse there’s slightly more than a 50% chance—ah, the precision of modern prophecy!—that the Federal Reserve will cut interest rates at its September powwow. Previously they thought December, but who among us can keep track of the opinions that flutter through the corridors of finance like lost pigeons? 🐦

We are thus told to expect not just one, but a series of delicate nibbles—25 basis points here, another there—spread carefully from September through June of 2026. Five little cuts, like a barber snipping at an old general’s hair, neither too much nor too little, keeping the markets looking respectable, if slightly sheepish.

And why this sudden optimism? Early evidence, they whisper, regarding President Donald Trump’s tariffs, is less catastrophic than the ruinous overtures foretold in previous nights of anxious card games. David Mericle, the chief philosopher in Goldman’s statistical monastery, seems to have concluded that while jobs are now harder to come by—a subtle way of saying “good luck out there, folks”—the labor market is, on the whole, plodding along like a mule who’s forgotten he’s angry.

According to the mystical calculations of the CME FedWatch Tool (the Oracle at Delphi of rate probabilities, but with more decimal places), there is a 62.7% chance the Fed will indulge in a modest 25-point trim at September’s gathering. As always, the Tool consults the entrails of the 30-day Fed Funds futures—futures being, of course, the one part of time economists have any interest in.

Embodied by this newfound exuberance, the strategists at Goldman Sachs, parchment and quill in hand, have lofted their 12-month S&P 500 forecast from a rather dignified 6,500 to a boldly ambitious 6,900—because if you’re going to dream, dream as the wealthy do, in increments of 400. For the end of the year: a leap from 6,100 to 6,600, with all the confidence of a man betting on a horse he’s never seen.

As of this moment, the S&P 500 glides at 6,225.52, dutifully up 0.5% since last week, and 3.66% for the month—a number which inspires equal measures of hope and mild indigestion in those who remember the past and fear the future. 🍸

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2025-07-09 16:01