Banking giant Goldman Sachs is reportedly bullish on US stocks for the rest of the year due to favorable macro and monetary conditions.
MarketWatch reports that a team of analysts led by Christian Mueller-Glissmann, head of asset allocation research at Goldman Sachs, are expecting risk assets to perform well into the end of this year.
“The business cycle slowdown has continued, but recession risk remains anchored while monetary and fiscal policy easing accelerates, creating still favorable macro conditions for risk assets.”
Citing the late 1990s and mid-1960s, the bank also noted that equities historically outperform during late-stage economic-cycle slowdowns with policy support when the risk of recession is low. Both of those periods “ultimately triggered strong equity rallies,” Mueller-Glissman said in the note.
Investors in the equities and fixed-income markets appear to have polar opposite outlooks on the US economy, according to Goldman Sachs managing director Shawn Tuteja.
Tuteja, who oversees exchange-traded fund (ETF) and custom baskets volatility trading in Goldman’s Global Banking & Markets division, notes in a new analysis that there are “growing fears” the US economy is headed for a slowdown.
Tuteja says the significant drop in bond yields suggests fixed-income investors expect numerous additional rate cuts from the U.S. Federal Reserve.
“For equities, it’s a different story. The S&P 500 continues to hit record highs. And in fact, it’s the most economically sensitive, low-quality and most speculative names that have led the last leg higher. In other words, equity investors think we’re going to thread the needle; that the Federal Reserve is going to continue to cut interest rates into an economy that is not only stronger than recent jobs data might suggest, but that actually might reaccelerate into 2026 due to fiscal stimulus from the government.
The fixed-income market is much more worried about a potential collapse in the employment data. So something’s got to give. Going forward, economic data releases will be really important, and markets could be extremely reactive to them, since each print helps shed light as to whether the equity market or the fixed income market is on the right side of this disconnect.”
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