Goldman Sachs Predicts 7.1% Q3 Earnings Growth, Cautions on Risks
Analysts at Goldman Sachs anticipate a 7.1 percent increase in S&P 500 earnings for the third quarter, the lowest growth in two years. Despite this, they predict a continued rally in global stock markets due to a robust U.S. economy and a dovish Federal Reserve stance.
Goldman Sachs strategists have been overweight equities for the past three months, expecting strong earnings growth and Fed easing without a recession. This positive outlook has been supported by record highs in global stock prices, driven by a rate cut from the Federal Reserve and renewed enthusiasm for artificial intelligence in tech heavyweights.
However, the team also warns of persistent risks of a growth or rate shock in the near future. They remain regionally neutral and prefer international diversification. In response to potential constraints from rising equity valuations, Goldman Sachs downgraded corporate bonds to underweight in the short term.
Goldman Sachs has raised its target for the S&P 500 to 6800 points within three months, expecting a further 2 percent gain. They recommend equities for the next 12 months, citing low recession risks and a favorable supply and demand dynamic for corporate bonds. Despite the caution, the overall outlook from Goldman Sachs remains bullish for the equity market.
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