Recently, with the bullish momentum of rising interest rates boosting US stocks to continuously hit new highs, it can be said to be an unstoppable trend. Behind this red-hot performance, many Wall Street giants are clearly happy to add fuel to the fire...

David Kostin, Chief US Stock Strategist at Goldman Sachs, predicted on Tuesday that once the dust settles on the US presidential election, the US stock market is expected to continue to rise.

Kostin said in an interview that he expects in a year$S&P 500 Index (.SPX.US)$it will be near the 6000 level. This means the index will be about 5% higher than the record closing level of around 5725.45 points on Tuesday, further increasing the gains. The S&P 500 index has already risen by around 20% this year, breaking historical closing highs over 40 times.

In fact, recently on Wall Street, there have been continuously emerging individuals bullish on the S&P 500 index breaking through the 6000-point integer mark.

Julian Emanuel of Evercore ISI was the first this summer to set 6000 points as his formal target. Meanwhile, Scott Rubner, colleague of Kostin and Managing Director of the Goldman Sachs Global Markets Division, believes that the S&P 500 index could reach 6000 points as early as later this year.

The most optimistic bull in the media survey this year, Brian Belski, Chief Investment Strategist at BMO, has also stated that the US stock market can easily break through this level.

So, what are the reasons for Kostin's bullish view on the S&P 500 index now?

Smooth sailing ahead after the election volatility.

Kostin stated that first, investors may have to experience some market turbulence in the coming weeks due to the election battle between US Vice President Harris and former President Trump about to be decided.

He mentioned that historically, this is a period where volatility tends to rise and stock prices fall.

"There is some uncertainty around the election, so this will cause some concerns in the short term, but this usually resolves itself after the election. Therefore, over time, the stock market often rebounds after the election," Kostin believes.

It is worth noting that since the initial 2024 target price forecast was released at the end of last year, Kostin has raised his expectations for the S&P 500 index three times, recently reaffirming the year-end target expectation for the S&P 500 index - 5600 points, as he expects the US election to bring short-term volatility.

The average year-end target expectation tracked by industry media for Wall Street strategists is around 5523 points.

Middle cap stocks offer opportunities.

Regarding specific stock selection, Kostin believes that there are opportunities hidden in current middle cap stocks.

He pointed out that the 'long-term track record' of middle cap stocks is more suitable for allocation than large cap and small cap stocks - with lower PEs. He also mentioned that middle cap stocks often perform well in the 3 and 12 months after interest rate cuts.

"Our primary focus now is on middle cap stocks, as they are the area most favored by many portfolio managers in the market. This is a truly possible area to outperform the large cap in the coming year," Kostin said.

Kostin also believes that strong corporate earnings will be the main driver of the US stock market in the coming months, and concerns about soft labor market data have been exaggerated. The recent increase in unemployment rates is mainly due to an increase in labor supply and temporary friction caused by new immigrants, rather than a sudden drop in labor demand.

Last weekend, Kostin's team stated that the slowdown in labor cost growth is actually a positive sign for corporate profit margins, which will have a positive impact on the US stock market - especially for those companies with higher labor costs.

Editor/Rocky