Goldman Sachs has laid out four stock market predictions on how the year may end. Wall Street is fast approaching the midpoint of 2024, with investors finding the performance of stocks thus far surprising. The S & P 500 is higher by 14% already this year, having topped 5,400 for the first time, already blowing past the year-end forecasts of many strategists. However, that advance in less than six months has disconcerted some investors who are uncertain how stocks will behave for the remainder of the year, especially as the bull market has been driven by just a handful of mega-cap tech stocks. Many investors anticipate further upside. Others expect a turn for the worse. In its revised forecast, Goldman Sachs anticipates the S & P 500 still has further to climb. On Friday, David J. Kostin, the firm’s chief U.S. equity strategist, hiked his forecast to 5,600 for the broad market index. That’s up from 5,200 and represents about 3% upside from current levels. .SPX YTD mountain S & P 500 Kostin wrote that smaller-than-expected downward revisions to consensus earnings estimates and a larger price-to-earnings premium for the mega-cap tech stocks support his upgrade. Nevertheless, the strategist laid out four alternative scenarios that he expects to potentially play out in the remaining six months of the year. These include: “catch-up,” “catch-down,” “continued megacap exceptionalism,” and “recession fears.” Here are the scenarios: Catch-up A “catch-up” scenario, in which the market rally broadens out from large-cap tech to reach lagging stocks, would imply further upside for the broad market index. In fact, the strategist anticipates that the S & P 500 can end the year at 5,900, roughly 9% above where it recently traded, in this scenario. As it is, Goldman said just five stocks — Alphabet , Amazon , Meta , Microsoft and Nvidia — are responsible for 60% of the S & P 500’s 14% advance this year. Meanwhile, the equal-weighted benchmark is higher by just over 3%. Catch-down Investors will want to brace themselves in the event of a “catch-down” scenario, which suggests that a correction is in store should earnings estimates for megacap tech stocks prove too buoyant. It would mean a 13% fall for the S & P 500, back down to 4,700. “The key risk to today’s market leaders is if current analyst estimates prove too optimistic,” Kostin wrote. “Strong upward revisions to earnings creates a higher bar for these stocks, particularly as investors have started to focus more on seeing revenues from investments in AI.” Megacap exceptionalism If AI stocks continue to outperform, defying expectations, stocks could see a huge megacap tech rally between now and year’s end. In this scenario, investors can expect the S & P 500 to close out the year at 6,300, a gain of about 16%. Recession fears On the other hand, an economic outlook that takes a turn for the worse would mean a sharp drop in equities going forward, of about 12% in the S & P 500, Goldman noted. “U.S. economic data surprises turned negative at the end of April and have trended lower,” Kostin wrote. “Although our economists still forecast above consensus economic growth, further weak growth data could reignite anxiety over a slowdown and push the S & P 500 P/E multiple down to 18x.” If the economy were to weaken, however, Kostin said the Federal Reserve, “would have ample room to cut interest rates if economic data deteriorate meaningfully,” limiting any potential downside.