Goldman Sachs Upgrades Global Equities Short-Term Rating to "Overweight," S&P 500 Q3 Earnings Growth Expected to Reach 27%

BlockBeats News, October 12 — Goldman Sachs has upgraded its global equities rating for the next three months from "Neutral" to "Overweight," while maintaining a bullish stance for the next 12 months. Goldman Sachs believes that sustained corporate earnings growth, a pullback in stock valuations from summer highs, and reduced investor positioning have improved the risk-reward profile for equities. According to FactSet data, the forward 12-month price-to-earnings ratio for the S&P 500 Index has dropped from 21.1x in early June to 19.1x, compared to approximately 22x at the start of the year. Goldman Sachs projects that S&P 500 constituent companies will achieve a 27% year-over-year earnings growth in the third quarter, marking the third consecutive quarter of earnings growth exceeding 25%. Investment in AI infrastructure remains a key driver. In terms of regional allocation, Goldman Sachs maintains an "Overweight" rating for U.S. and Asian equities, while keeping a "Underweight" rating for European equities. Additionally, the firm has upgraded its 12-month government bond rating to "Overweight," recommending a "barbell strategy" that allocates one end to tech stocks and the other to stocks with bond-like characteristics, while favoring shorter-duration bonds and cash assets. Goldman Sachs also cautions that rising U.S. Treasury yields, higher energy prices, and uncertainties surrounding the U.S. midterm elections could still exacerbate market volatility. Its bullish outlook remains contingent on sustained corporate earnings delivery and no further deterioration in financial conditions. [Original Link]