GS targets for the stock index is continued strength this year and next:

  • Our forecast trajectory of the S&P 500 remains unchanged. We expect a modest 3% rise to our year-end target of 2850 followed by a 5% gain in 2019 to 3000

Its a detailed note, but in summary (bolding mine):

  • The US economy is growing, corporate profits are rising, and stock prices should continue to climb through 2019.
  • However, the appreciation potential will be constrained by tightening monetary policy, a flattening yield curve, rising trade tensions, and the upcoming mid-term Congressional elections.
  • We raise our S&P 500 earnings estimates for each of the next three years. Economic growth, oil prices, and tax rates have been better than expected in 2018 and EPS will surge by 19% to $159. Profit growth will decelerate to 7% ($170) in 2019 followed by 5% growth to $178 in 2020. Our estimates trail bottom-up consensus growth of 21%, 10%, and 9%, respectively.
  • Valuation compression results when earnings growth exceeds share price gains. An environment of decelerating economic growth, a tightening Fed, a flattening yield curve, and political uncertainty is consistent with a P/E multiple that will end 2018 at 16.8x, unchanged versus today but 10% below its January peak.
  • Cyclicals should continue to outperform. We reiterate our Overweight recommendation on Financials.
  • We raise Information Technology to Overweight from Neutral. Technology will post among the fastest sales and earnings growth through 2019 and the sector will benefit in the current late cycle environment. The sector carries a high valuation relative to the past decade, but trades in line with history when viewed across a 30-year time frame.
  • We lower Industrials to Neutral from Overweight given decelerating economic growth and rising input costs.
  • Looking ahead to the index reclassification at the end of 3Q, we would Overweight both the new Communications Services and future legacy Tech sectors but would Underweight legacy Consumer Discretionary. The largest stock in each sector will be GOOGL (28%), AAPL (20%), and AMZN (29%)