Latest news with #DavidKostin
Yahoo
22-07-2025
- Business
- Yahoo
One chart shows how the market has moved on from tariffs — for now
Stocks aren't moving on tariff headlines like they used to. This trend has been evident over the past several weeks as equities have continued to rise to record highs despite ongoing threats from President Trump regarding escalating tariffs on a variety of countries. In a recent note to clients, Goldman Sachs chief US equity strategist David Kostin analyzed the performance of the S&P 500 (^GSPC) and a basket of stocks with "broad tariff exposure." Through April, both stocks had been reacting aggressively to tariff announcements from Trump. But as the below chart shows, the reactions have become increasingly smaller during Trump's latest flurry of letters detailing reciprocal tariffs throughout July. "Our client conversations indicate that many investors believe tariff rates will eventually settle lower than what the recent announcements have indicated," Kostin wrote. Kostin noted that, up to this point, economic data on consumer spending, inflation, and the labor market have shown a "smaller impact" from tariffs than many investors have feared. This resiliency, which also emerged in the early reporting period for second quarter financial updates from S&P 500 companies, has been backing the market's chug higher to fresh records. "Equity investors appear to be looking through potential near-term economic and earnings weakness and focusing instead on the prospect for robust growth in 2026," Kostin wrote. Read more: What Trump's tariffs mean for the economy and your wallet Kostin expects the S&P 500 to gain another 5% in the next six months and 10% in the next 12 months. That call is predicated in part on "investors' continued willingness to focus on the solid longer-term trajectory of earnings growth," per Kostin. Morgan Stanley chief investment officer Mike Wilson also expressed optimism about the outlook for stocks in the intermediate term, writing in a note to clients he's "leaning toward" his bull case for the S&P 500, which would bring the benchmark index to 7,200 in the next year. That stance relies on corporate earnings resilience and the lack of impact seen from tariffs thus far. "An under appreciated aspect of the earnings story into 2026 is that positive operating leverage is returning due in part to lower wage costs, and it may be further enhanced by AI adoption," Wilson wrote. "We're also not hearing a significant level of concern from corporates in terms of tariff-related costs impacting margins thus far, though we could hear more about this risk in 3Q." Wilson did note there are a variety of short-term risks, such as the 10-year Treasury yield (^TNX) recently rising close to 4.5%, a level that's challenged equities over the past several years, and the possibility that tariffs send inflation higher in the next few months. "It's important to note that we think these risks are temporary and only likely to lead to modest consolidation in price — we're buyers of dips," Wilson wrote. Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer. Sign in to access your portfolio
AU Financial Review
11-07-2025
- Business
- AU Financial Review
Earnings, not valuations, are key hurdle for US equities: Goldman
David Kostin, Goldman Sachs' chief US equity strategist, said he pushed back against clients' concerns – because of rising valuations and narrow breadth – over his upward revisions this week to his S&P 500 targets. In a note, Kostin said clients should refocus. 'Rather than valuations, we view earnings as the main source of uncertainty around our forecast.' He expects the benchmark to reach 6400 over three months, 6600 over six months and 6900 over 12 months. It closed the week at 6259.75.
Axios
09-07-2025
- Business
- Axios
Goldman Sachs gets bullish ahead of growth cycle
Goldman Sachs is raising its year-end price target for the S&P 500, even as it has trimmed expectations for corporate earnings growth. The call is based on earlier and deeper interest rate cuts from the Federal Reserve, corporate resilience, lower bond yields and investor positioning (aka vibes). Why it matters: Investing for an environment priced for an economic expansion looks very different than investing to hedge against potential weakness. What they're saying: David Kostin, chief U.S. equity strategist for Goldman Sachs, tells Axios cyclical stocks are implying economic growth of 3%. "When investors believe the economy is rallying…the cyclicals outperform the defensives a lot," he says. Zoom in: In terms of sector performance, Kostin is bullish on three things. Software and services, which he sees being bolstered by the expansion of artificial intelligence and application software. Alternative asset managers, as the major banks have rallied "a lot, but the alternative asset managers have not," he says, noting these firms could continue to benefit from an improved capital markets backdrop. Companies with high floating rate debt, which would benefit from lower bond yields and lower interest rates. Zoom out: Goldman chief economist Jan Hatzius sees three rate cuts this year off the back of economic growth, combined with cooling inflation that allows the Federal Reserve to cut rates. Stagflation isn't a concern because tariffs will be a one-time inflation hike, according to Kostin. "No recession, equity prices rally, that is our baseline." Yes, but: There are still downside risks, especially given the market is pricing for a level of growth that doesn't align with the latest GDP data. Just because the market is pricing for economic growth doesn't mean it's guaranteed, Kostin notes. On tariffs, he says we still need clarity on who's paying them to be confident in broad earnings. The thin market rally could be an issue, with Kostin adding this is "one of the narrowest drivers of a rally in the last 50 years outside of recession."
AU Financial Review
08-07-2025
- Business
- AU Financial Review
ASX set for muted open amid US trade clouds
Goldman Sachs equity strategist David Kostin has turned bullish on the outlook for the S&P 500. In a note, Kostin said the S&P 500 recently climbed to a new record and further upside would be consistent with the historical playbook following the resumption of Federal Reserve cutting cycles. 'Our new 3- and 12-month returns forecasts are +3 per cent and +11 per cent, indicating S&P 500 levels of 6400 and 6900 (previously 5900 and 6500). Our 6-month return forecast, corresponding with year-end 2025, is +6 per cent to 6600 (previously 6100). Our year-end S&P 500 forecast ranks at the upper end of the distribution of strategist estimates.' Kostin also said earlier and deeper Fed easing and lower Treasury yields than we previously expected, the 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 price-to-earnings forecast of 22 times (from 20.4 times). 'Our economists' revised Fed forecast calls for three sequential 25 basis point cuts this year, beginning in September, followed by an additional two quarterly cuts in 2026. As a result, our rates strategists expect the nominal 10-year US Treasury yield to end 2025 at 4.2 per cent (vs. 4.5 per cent previously). 'In our macro valuation model, every 50 bp decline in real yields is associated with a roughly 3 per cent increase in S&P 500 forward P/E, all else equal. In addition to the improved outlook for interest rates, the strength of first-quarter earnings results boosted our confidence that the largest stocks will sustain current investor expectations for their long-term growth for at least the next few quarters, helping support valuation for the aggregate S&P 500 index.'
Yahoo
08-07-2025
- Business
- Yahoo
S&P 500 Rally Isn't Over Yet, Say Goldman and BofA in Bold New Targets
July 8 - Goldman Sachs and Bank of America lifted their S&P 500 targets as large-cap firms weather policy headwinds. Goldman Sachs now sees the index reaching 6,600 by year?end and 6,900 within 12 months, up more than 6% and 11%, respectively, from its prior outlook. BofA followed, boosting its year?end goal to 6,300 and its 12?month view to 6,600, citing resilience in Corporate America despite persistent uncertainty and elevated sovereign yields. Most companies have continued to guide on profits, and estimate dispersion is near post?COVID lows, said BofA's Savita Subramanian, noting dividends may now contribute more to returns than under zero interest rate policy. Goldman's David Kostin maintained 7% EPS growth forecasts for both 2025 and 2026 but warned that tariffs pose risks to corporate profits. He added that a broader market rally is more likely than a catch down after a narrow?breadth rally. Both firms expect limited upside near term, with BofA seeing sideways trading through Q3 amid mixed earnings signals. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
