Goldman Sachs: U.S. Stock Market Rally May Start Early This Year

Goldman Sachs believes that the market may be overpricing stagflation and the risks of rising U.S. Treasury yields. As the impact of tariffs diminishes, energy prices potentially retreat, and AI technology drives down costs, inflationary pressures in the U.S. are expected to ease. Although economic growth may slow, core corporate earnings remain resilient. In this "Goldilocks" scenario, enthusiasm for AI investments may reignite, and the year-end rally in U.S. stocks may not have to wait until after the U.S. midterm elections to begin. Goldman Sachs partner Mark Wilson noted that recent market trends have shown related signs, with AI-related assets once again attracting capital after months of consolidation. Goldman Sachs economist Jan Hatzius believes that the upside risks to U.S. economic growth are diminishing. As the effects of fiscal stimulus fade and gasoline prices and mortgage rates rise, economic growth may further slow, limiting the ability of central banks to continue raising interest rates. Ben Snider, head of Goldman Sachs' U.S. strategy team, stated that while some sectors may experience temporary "excess profits," core corporate earnings are likely to maintain strong growth at least until the end of 2027. Based on this, Goldman Sachs believes that if inflation continues to decline, economic growth slows moderately, and corporate earnings remain resilient, the market may gradually shift from stagflation trading to a "Goldilocks" scenario.

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