Goldman Sachs strategists expect that the Fed's interest rate cuts will continue to drive the rise of the US stock market.

Key points: Goldman Sachs stated that the rise of the US stock market may continue under a strong economic outlook. The market gains are concentrated in a few large stocks, and most S&P 500 index components remain below their peaks. Expected Fed rate cuts and improvements in corporate earnings may extend the rise to small-cap stocks. Goldman Sachs strategists predict that the record gains in the US stock market will continue due to favorable macroeconomic conditions and upcoming policy adjustments. The team led by David Kostin noted that although major stock indices like the S&P 500 have reached all-time highs, the gains are still concentrated in a few large stocks. The median of S&P 500 index components is still about 11% below its 52-week high, highlighting the limited breadth of the market's rise. Kostin and his team believe this dynamic may change in the coming months. With the Fed expected to start cutting rates and corporate earnings showing signs of recovery, strategists believe the stock market may see a broader rebound, extending to underperforming small-cap stocks and undervalued zones. Kostin stated, "Limited breadth defines the current cycle." He added that the Fed's policy easing and profit growth may help "broaden participation across the entire stock market."