The S&P 500 index is likely to rise 7% more this year to end 2021 at 4,700 as companies report strong earnings growth and the Federal Reserve maintains its pandemic-era monetary stimulus, Goldman Sachs analysts said.

They raised their 2021 price target for the benchmark U.S. stock index to 4,700 from 4,300, according to a note published on Thursday, implying a 25% rise this year. The index rose over 16% last year as ultra-low interest rates to lift the economy from a pandemic-led slowdown drove a sharp recovery in stocks.

It has posted six straight months of gains in 2021, rallying more than 17% as easing of COVID-19 restrictions helps drive economic growth and corporate earnings beat expectations. The index closed at 4,402.66 on Wednesday.

The analysts also raised the earnings per share forecast for S&P 500 companies in 2021 to $207 from $193, implying annual growth of 45%.

"We expect stronger revenue growth and more pre-tax profit margin expansion as firms successfully manage costs and as high-margin Tech companies become a larger share of the index," Goldman Sachs economist David Kostin said.

But the analysts warned that uncertainty around fiscal and monetary policy would likely drive volatility later in the year.

(Reporting by Tanvi Mehta in Bengaluru; Editing by Aditya Soni) ((tanvi.mehta@thomsonreuters.com; https://twitter.com/TanviMehta710;))