Goldman Sachs lifts S&P 500 return forecasts on Fed outlook, large-cap stocks
The Wall Street bank has revised its S&P 500 return forecasts, projecting a 3 per cent gain over three months and an 11 per cent gain over 12 months, targeting index levels of 6,400 and 6,900, respectively.
"Earlier and deeper Fed easing and lower bond yields than we previously expected, continued fundamental strength of the largest stocks, and investors' willingness to look through likely near-term earnings weakness support our revised S&P 500 forward P/E forecast of 22 times from 20.4 times," analysts said in a note late on Monday.
For the index's six-month return, Goldman Sachs has raised its forecast to +6 per cent, projecting a year-end level of 6,600, and up from its previous estimate of 6,100.
Wall Street closed at record highs last week, buoyed by signs of resilience in the country's labour market, which defied investor fears of a slowing economy.
After a selloff in April following US President Donald Trump's "Liberation Day" tariff announcements, stocks have rebounded as hopes for trade deals and potential Federal Reserve rate cuts eased investor uncertainty.
"Recent inflation data and corporate surveys indicate less tariff pass-through so far than we expected," the analysts said.
"However, we expect the digestion of tariffs to be a gradual process, and large-cap companies appear to have some buffer from inventories ahead of the increase in tariff rates."
The analysts maintained their earnings-per-share growth forecasts for the S&P 500 at +7 per cent for both 2025 and 2026, but flagged that risks remain on both the upside and downside. They plan to reassess these estimates following the second-quarter earnings season.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Malaysian Reserve
27 minutes ago
- Malaysian Reserve
AMD says it will restart MI308 sales to China after US review
ADVANCED Micro Devices Inc. said that it plans to restart shipments of its MI308 chips to China after the US said it would approve the sales, following a similar decision on an Nvidia Corp. semiconductor. The US Commerce Department told AMD that license applications for the MI308 products would move forward for review, an AMD spokesman said Tuesday. Allowing the products back into China is a reversal for President Donald Trump's administration, which spent weeks insisting that curbs on chips sales to the Asian country were not up for discussion. The news comes after weeks of thawing ties between the two nations as well as Nvidia Chief Executive Officer Jensen Huang's meeting with Trump last week. AMD said in April that export restrictions on the MI308 chips would cost the company about $800 million. Earlier, Nvidia similarly said the government had agreed to green-light shipments of its H20 AI chip to China, a decision that could add billions to the company's revenue this year. AMD shares rose 5% in premarket trading on Tuesday. The stock closed at $146.24 on Monday and has gained 21% this year. –BLOOMBERG
The Star
32 minutes ago
- The Star
Chinese firms rush to buy Nvidia AI chips as sales set to resume
BEIJING/HONG KONG: Chinese firms are scrambling to buy Nvidia's H20 artificial intelligence chips, two sources told Reuters, as the company said it planned to resume sales to the mainland days after its CEO met U.S. President Donald Trump. Nvidia's AI chips have been a key focus of U.S. export controls designed to keep the most advanced chips out of Chinese hands over national security concerns. The U.S.-listed company has said the curbs would cut its revenue by $15 billion. The world's most valuable firm is filing applications with the U.S. government to resume sales to China of the H20 graphics processing unit (GPU), and expects to get the licences soon, Nvidia said in a statement. "The U.S. government has assured Nvidia that licences will be granted, and Nvidia hopes to start deliveries soon," said the company, whose chief executive, Jensen Huang, is visiting Beijing and set to speak at an event on Wednesday. Rival AI chipmaker AMD also said it was informed by the U.S. Department of Commerce that licence applications to export its MI308 chips to China will be moving forward for review. AMD, which has forecast a $1.5 billion revenue hit this year due to the U.S. export curbs, plans to resume shipments of these chips when licences are approved, it said in an emailed statement. Shares of both Nvidia and AMD jumped about 5% in premarket trading. "This is a major catalyst for Nvidia shares, as many had written off the chance of any meaningful revenue coming from China," said Matt Britzman, senior equity analyst, Hargreaves Lansdown. The White House, which has previously expressed concern that the Chinese military could use AI chips to develop weapons, did not respond to a request for comment. Chinese companies have scrambled to place orders for the chips, which Nvidia would then need to send to the U.S. government for approval, the sources familiar with the matter said. They added that internet giants ByteDance and Tencent are in the process of submitting applications. Central to the process is a approved list put together by Nvidia for Chinese companies to register for potential purchases, one of the sources said. ByteDance and Tencent did not respond to a request for comment. Nvidia declined to comment on the approved list system. Nvidia, which has criticised the export curbs the Trump administration imposed in April that stopped it from selling its H20 chip in China, also said it has introduced a new model tailored to meet regulatory rules in the Chinese market. Huang is set for a media briefing in Beijing on Wednesday when he attends a supply chain expo. The Nvidia CEO also visited China in April and stressed the importance of the Chinese market. "The Chinese market is massive, dynamic, and highly innovative, and it's also home to many AI researchers," Huang told Chinese state broadcaster CCTV on Tuesday. "Therefore, it is indeed crucial for American companies to establish roots in the Chinese market." Asked at a regular foreign ministry briefing in Beijing about Nvidia's plans to resume AI chip sales, a spokesperson said, "China is opposed to the politicisation, instrumentalisation and weaponisation of science, technology and economic and trade issues to maliciously blockade and suppress China." SUPPLY CHAIN Nvidia has faced increased competition from Chinese tech giant Huawei and other makers of GPUs - the chips used to train artificial intelligence. But Chinese companies, including big tech firms, still crave Nvidia chips for its computing platform known as CUDA. Huang's visit is being closely watched in both China and the United States, where a bipartisan pair of senators last week sent the CEO a letter asking him to abstain from meeting companies working with military or intelligence bodies. The senators also asked Huang to refrain from meeting with entities named on the United States' restricted export list. The move to resume sales of the H20 chips comes amid easing tensions between Washington and Beijing, with China relaxing controls on rare earth exports and the United States allowing chip design software services to restart in China. "The uncertainties between the U.S. and China remain high and despite a pause in H20's ban, Chinese companies will continue to diversify their options to better protect their supply chain integrity," said He Hui, research director of semiconductors at Omdia. The H20 chip was developed specifically for the Chinese market after U.S. export curbs imposed on national security grounds in late 2023. The AI chip was Nvidia's most powerful legally available product in China until it was effectively banned by Washington in April. The H20 ban forced Nvidia to write off $5.5 billion in inventories, and Huang told the Stratechery podcast that the company also had to walk away from $15 billion in sales. But now, the possibility of new licences could represent about $15 billion to $20 billion in additional revenue this year, depending on when the approval is granted and how quick the deliveries can ramp back up, said Hargreaves' Britzman. "There's also a chance Nvidia can reverse some, or all, of the $5.5 billion impairment charge taken in the first quarter, providing a double boost for earnings." Nvidia also announced the development of a new AI chip designed specifically for China, called the RTX Pro GPU. The company described it as "fully compliant" with U.S. export controls and suitable for digital twin AI applications in sectors, such as smart factories and logistics. In May, Reuters reported Nvidia was preparing to launch in China a new AI chip, based on the RTX Pro 6000D, at a significantly lower price point than the H20. The graphics processing unit would be part of Nvidia's latest generation Blackwell-architecture AI processors and was expected to be priced well below the H20 for its weaker specifications and simpler manufacturing requirements, sources said. China generated $17 billion in revenue for Nvidia in the fiscal year ending January 26, or 13% of total sales, based on its latest annual report. Huang has consistently highlighted China as a critical market for Nvidia's growth. - Reuters
Malay Mail
2 hours ago
- Malay Mail
Betting on TACO: How stock markets learned to ignore Trump's bluster amid latest tariff threats
PARIS, July 15 — When it comes to Donald Trump's repeated tariff threats and financial markets, it looks like 'TACO' is the dish investors are dining on, analysts said. The acronym — coined by a Financial Times columnist and standing for 'Trump Always Chickens Out' — has become a lodestar for equities, currencies and commodities traders, resulting in diminishing reactions to the US president's warnings. To be sure, Trump's vows of future tariff hikes still weigh on markets — just not to the extent they used to. When his 'Liberation Day' protectionist offensive was unveiled in April, the reaction was panic. Now, said analysts, traders take his tariff announcements in their stride. On Monday, stock markets largely shrugged off Trump's weekend threat to impose 30-percent tariffs on the EU. 'It's amazing in fact, the tariff rates are as high as they were announced back in April, yet the market reaction is completely different,' Ipek Ozkardeskaya, an analyst at Swissquote Bank, told AFP. 'Investors continue to bet that Trump 'will chicken out' — the so-called TACO trade — and that negotiations will extend beyond August 1st,' when the tariffs are to come into effect, she said. Despite Trump trying to raise the stakes with several tariff announcements over recent days, targeting a dozen countries and products such as copper, 'the market has increasingly overcome its queasiness', said Jim Reid, a Deutsche Bank analyst. US stock indices are hitting record highs, while European equities are also proving attractive to buyers. Germany's DAX index has risen more than 20 percent since the beginning of this year, despite the export-dependent country being among the more exposed to Trump's levies. A member of civic groups wearing a mask of US President Donald Trump performs during a protest against Trump's tariff policy near the US embassy in Seoul on July 15, 2025. — AFP pic Inured to Trump's behaviour That resilience speaks to traders becoming inured to Trump's pattern of behaviour that goes from headline threats, to delays, and then in some cases to negotiated outline deals. 'Markets aren't collapsing because they've grown conditioned to tariff threats as part of the US negotiating playbook. Investors see this more as tactical leverage than an immediate economic cliff,' Stephen Innes, managing partner at SPI Asset Management, said. When it comes to the latest threat, 'the real tell is that the EU hasn't responded with reciprocal tariffs, which suggests Brussels still thinks a negotiated outcome is possible — and that's keeping risk sentiment afloat,' he said. 'The markets expect the (EU-US) negotiations to continue,' agreed Alexandre Baradez, head of market analysis at IG France. But there is a lingering worry that Trump this time might make good on his threat. 'If huge tariffs do get imposed on August 1st, in thin holiday markets, we could get a sizeable market reaction,' said Deutsche Bank's Reid. In America, the effects of the tariffs Trump has already implemented are also being watched closely, especially for signs of spiking inflation. That, combined with lower growth, could usher in a period of stagflation, which could prevent the US central bank, the Federal Reserve, using lower interest rates to revive the economy. 'The market's reaction — or the lack thereof — increases the gap between how investors want to see the reality, and what the reality will look like,' warned Swissquote Bank's Ozkardeskaya. — AFP
