TREE NEWS reports: Goldman Sachs strategists led by Ben Snider said rising interest rates weigh on equity valuations but corporate earnings remain the most important driver of stocks, and expect the bull market to continue. The S&P 500’s forward P/E has fallen to 19x from 22x at the start of the year, yet the index sits within 2% of its record high. The market has priced in more than three rate hikes over the next year; in the first three months of the past seven hiking cycles, the S&P 500 fell 2% on average but rose 9% in the 12 months after the first hike.
Goldman Sachs Strategists See Bull Market Continuing Through Fed Rate Hikes
AI take
The call rests on an earnings-over-multiple argument, and the valuation compression cited is the evidence: the S&P's forward P/E has already de-rated meaningfully while the index sits near record highs, implying earnings have absorbed the hit so far. That framing matters for anyone treating rate hikes as an automatic equity headwind, since the historical hiking-cycle pattern cited is mixed rather than uniformly negative. The open question is whether earnings momentum can keep offsetting further multiple compression if the market's rate-hike expectations are realized.
Generated by AI for reference only.
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