Earnings growth is set to peter out — but not the bull market, says Goldman Sachs. Here's what the firm recommends.
Goldman Sachs posits that while earnings growth is projected to slow down significantly by 2027, the broader bull market will remain intact. The firm advocates for a strategic focus on growth-oriented companies, as these are likely to become increasingly rare in a decelerating economic landscape. This perspective is critical for investors navigating the current market uncertainties, where distinguishing between sustainable growth and the broader market dynamics will be essential.
Where it sits in our coverage
Our consensus EUR/USD target sits at 1.075 (median across 8 firms), with Goldman at the upper bound (1.12) and BofA at the lower (1.04). MarketWatch's view aligns more closely with the upper third — JPMorgan shares that framing with a target of 1.10.
How firms align
Goldman's position on sustained bull market dynamics resonates with JPMorgan, which is also observing the need to focus on resilient growth companies. Conversely, BofA offers a more bearish outlook, advocating caution against a broader market downturn. Details can be found in our internal reports on both goldman and bofa.
What the data shows
Recent analyses suggest a vital shift in investor sentiment towards high-growth sectors, reinforcing projected market performance even as earnings growth forecasts revise downward. For deeper insights, see /research/<slug>.
How firms align with this view
Aligned with the headline view
Contrary positioning
Key takeaways
- 01Focus on high-growth stocks could yield strategic advantages amid slowing earnings.
- 02Watch for shifts in investor sentiment, especially in growth sectors.
- 03Potential resistance levels may shift as growth becomes premium, eye key earnings reports.
- 04Market resilience hinges on sectors that can sustain growth in a decelerating economy.
Market implications
Next, watch for EUR/USD performance as earnings reports loom, particularly around the 1.075 consensus level. A breach of 1.10 could reinforce bullish sentiment, while a dip below 1.04 would signal increased risk aversion.
Risks to this view
Should economic indicators point to a sharper-than-expected earnings decline or recessionary signs, this could trigger a reevaluation of bullish stances. Key catalysts include upcoming Federal Reserve announcements or unexpected changes in corporate guidance.
Sentiment by currency
USD~EUR~JPY~GBP~Composite USD score: +0.00
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