Goldman Sachs has warned that the S&P 500 could fall to about 6,300 should economic growth weaken, identifying rising oil prices and geopolitical tensions associated with the Iran conflict as key downside risks for equities.
According to the bank, the pullback the index has recently experienced largely mirrors the historical pattern that follows major geopolitical shocks - a period of heightened market volatility that often precedes a resumption of the longer-term upward trend.
Goldman cautioned, however, that the current conflict may have more lasting implications for the macroeconomic outlook than some prior shocks. The bank expects that higher oil prices combined with increased uncertainty will act to slow economic growth, keep inflation higher for longer and delay the timing of Federal Reserve policy easing relative to earlier expectations.
In a specified moderate growth shock scenario, Goldman estimates that weaker investor sentiment and compressed valuation multiples could push the S&P 500 down to around 6,300.
Despite outlining this downside pathway, the bank preserved a broadly constructive view on equities over a longer horizon. Goldman highlighted that corporate earnings growth continues to find support from ongoing investment in artificial intelligence - an area the bank expects to remain a significant driver of profit expansion for U.S. companies.
Goldman also projected that by the end of 2026 there should be greater clarity on both the Iran conflict and the likely trajectory of Federal Reserve policy. That said, the bank noted uncertainty about the long-term consequences of artificial intelligence is likely to remain and could continue to exert downward pressure on equity valuation multiples over time.
The assessment frames a dual picture for markets: a plausible near-term downside if growth conditions deteriorate, and a constructive longer-term earnings backdrop anchored by AI investment, even as questions about AI's ultimate impact linger.