IVV, SPY, and S&P 500 ETFs have more upside – Goldman Sachs

American stocks are doing well, helped by big technology companies like Tesla, Apple, Nvidia, and Microsoft. The S&P 500 index moved to a bull market last week, signaling that it had jumped by over 205 from the lowest level this year. While Morgan Stanley believes that the rally will fade, those at Goldman Sachs believe that the IVV and SPY ETFs have more upside.

Goldman Sachs boosts S&P target

The S&P 500 index has jumped sharply in the past few months. As a result, its biggest ETFs – SPDR S&P 500 ETF and iShares Core S&P 500 ETFs – have all moved into a bull market. They have all jumped by more than 125 this year.

In a note, David Kostin, an analyst at Goldman Sachs said that American stocks have more upside going forward. He expects that the S&P 500 index will jump by another 5% in the coming months, pushing it to $4,500. He argued that this growth will happen because the rally in tech stocks will broaden to other companies.

Morgan Stanley analysts have taken the opposite view. Mike Wilson, the bank’s top Wall Street analyst, has insisted that we are now in a bear market rally and warned that stocks could pull back later this year. 

He has argued that corporate earnings growth are not growing fast enough. As such, he expects that the S&P 500 will resume the downward trend in the next few months, as we wrote here.

The SPY and IVV ETFs will react to several news this week. The most important one will be the upcoming interest rate decision by the Federal Reserve. Analysts believe that the Fed will leave interest rates unchanged on Wednesday and then hike again in July. The ETFs will also react to the latest US inflation data.

SPY ETF technical analysis

SPY chart by TradingView

The SPDR S&P 500 ETF made a golden cross pattern in March when the 50-day and 200-day exponential moving averages (EMA) made a bullish crossover. Most recently, the fund has jumped above the key resistance points at $416 and $426, the highest points on February 2nd and  August 15th last year.

The index has jumped above all moving averages while other oscillators are supportive of more upside. Therefore, the shares will likely continue soaring as buyers target the next resistance point at $454, about 6% above the current level. If this happens, the IVV ETF will also jump since the two have a close correlation.