After a turbulent few weeks through late October, U.S. stocks are likely headed for a year-end rally that could push the S&P 500 Index past the 6,000 level, says Scott Rubner at Goldman Sachs Group Inc.

“I am bullish on U.S. equities for a year-end rally starting on Oct. 28 and I am worried that my 6,000 target is too low,” Rubner, the bank’s managing director for global markets and tactical specialist, wrote in a note to clients Wednesday.

Seasonal tailwinds in the market are a key pillar of that call, he said. Data going back to 1928 show the S&P 500 tends to rally about 4% on average from Oct. 27 through year-end, his calculations show. On top of that, stocks tend to advance after U.S. presidential elections as investors rotate out of cash and into equities after risks around the vote fade, he said. 

The year-end target of Rubner, the bank’s tactical specialist, differs from a 5,600 estimate of Goldman Sachs’ chief U.S. equity strategist David Kostin. The benchmark gauge traded at around 5,700 on Wednesday.

Rubner also pointed to a number of other headwinds that will probably subside later this month, following a volatile stretch that is keeping him bearish for the next several weeks.

Share repurchases, for example, are expected to resume on Oct. 25, when markets exit an earnings-related buyback blackout. Corporate America is expected to emerge as a buyer, supporting the demand for U.S. stocks.

“The largest buyer of U.S. equities in 2024 can purchase 35% less shares during the closed window,” he wrote.  

Those tailwinds won’t kick in until stocks are done with a bout of volatility in the next three weeks, when a supply of U.S. stocks will likely exceed the demand. One reason for that is a $14 billion drop in the S&P 500 Index gamma in the last two days, the biggest two-day decline in Goldman’s dataset. Following this drop in gamma, market dealers are no longer required to buy stocks on the dip to keep their positions neutral.

This article was provided by Bloomberg News.