Latest news with #equity strategist
Yahoo
a day ago
- Business
- Yahoo
Goldman Sachs Flags Risk: S&P's Q2 Beat Masks Stretched 2026 Margins
Aug 18 - S&P 500 companies posted stronger-than-expected second-quarter earnings, but Goldman Sachs (NYSE:GS) urges caution on profit margins for 2026. David Kostin, Goldman's chief U.S. equity strategist, says S&P 500 EPS rose 11% year over year, still above consensus, as analysts cut estimates earlier. Roughly 60% of reporters topped forecasts, reflecting a low bar heading into the season. Guidance turned more positive: 58% of firms raised their 2025 outlook, double the rate from the first quarter, and analysts lifted EPS forecasts through late 2025 and into 2026. Still, Kostin warns the dramatic expansion baked into margin projections for next year looks unrealistic even if companies offset higher costs. A weaker dollar helped nominal sales for large caps, while on a constant-currency basis real sales slowed across market caps and contracted for mid- and small-caps. The mega-cap tech subgroup, led by the Magnificent Seven, posted standout growth, with that cohort's EPS up 26%. Nvidia (NASDAQ:NVDA) remains a focal point; Wall Street has already boosted 2026 capex estimates. Goldman expects analyst revisions to drift toward long-term trends rather than the sharp uplift priced into some forecasts. This article first appeared on GuruFocus.
Yahoo
07-08-2025
- Business
- Yahoo
Rate cuts could be weeks away. Here's how much history says stocks could rise as the Fed eases policy.
Investors expect the Fed to resume rate cuts next month. Historically, rate cuts have led to strong S&P 500 gains, but there have been exceptions. Here's what history says about how the market behaves once rate cuts start back up. After a weak few months of job growth, investors are banking on rate cuts from the Federal Reserve at their September meeting, and history shows cuts could be like rocket fuel for stocks in the months that follow. LPL Financial recently conducted an analysis of how stocks have performed from the first rate cut in a rate-reduction cycle until the eventual start of a new hiking cycle. On average, the S&P 500 has returned 30.3% during the nine periods when rates have been on the decline since 1974. The median return during those periods was 13.3%. Returns have been positive in six of those nine cycles. "Using history and prior Fed cutting cycles as a guide, some upside potential may remain for the second half of 2025," Jeff Buchbinder, LPL's chief equity strategist, said in the August 5 report. "But of course, past performance does not guarantee future results, and a new tariff regime not seen since the 1930s could slow earnings growth and fuel volatility." The largest market surges came in the lead up to the dot-com bubble, when the S&P 500 rose 161% from 1995 to 1999, the analysis showed. Other big gains included 62.8% from 1984 to 1993, and 38.2% from 2019 to 2021. But rate cuts aren't always a tailwind, especially during recessionary periods where the Fed acts too late. The market fell 23.5% during the 2007-2009 rate-cutting cycle, and from 2001-2004, the S&P 500 dropped 9.6%. This time around, Buchbinder said it's not a sure thing that rate cuts will be a boon for stocks, with ebullient investor sentiment having pushed up the market to new highs despite uncertainty remaining about the health of the economy. The market has also risen 12% already since the Fed's first cut of the cycle last September. "The delayed effects of trade policy are likely to weigh on the economy in the second half, leading to weaker labor market demand," Buchbinder wrote. "Recent market complacency toward trade policy and an economic narrative dependent upon strong economic data has caught our attention in recent weeks as a potential point of weakness." It's also not a guarantee the Fed continues to ease policy in the months ahead. Economists at Morgan Stanley and Bank of America both see the central bank keeping rates steady for the rest of 2025 despite CME FedWatch data showing investors pricing in 93.2% odds that the Fed cuts in next month. Given the apparent heightened levels of risk at the moment, Buchbinder said a conservative approach could be the best way forward in the near term. The firm likes growth stocks, large caps, and the financials and communication services sectors, he said. "Bottom line, investors may be well served by bracing for occasional bouts of volatility given how much optimism is currently reflected in equity prices," Buchbinder said. The firm's short-term asset allocation committee "advises against increasing portfolio risk beyond benchmark targets currently and continues to monitor tariff negotiations, economic data, earnings, the bond market, and various technical indicators to identify a potentially more attractive entry point to add equities on weakness," he added. Read the original article on Business Insider Sign in to access your portfolio
Yahoo
07-08-2025
- Business
- Yahoo
Rate cuts could be weeks away. Here's how much history says stocks could rise as the Fed eases policy.
Investors expect the Fed to resume rate cuts next month. Historically, rate cuts have led to strong S&P 500 gains, but there have been exceptions. Here's what history says about how the market behaves once rate cuts start back up. After a weak few months of job growth, investors are banking on rate cuts from the Federal Reserve at their September meeting, and history shows cuts could be like rocket fuel for stocks in the months that follow. LPL Financial recently conducted an analysis of how stocks have performed from the first rate cut in a rate-reduction cycle until the eventual start of a new hiking cycle. On average, the S&P 500 has returned 30.3% during the nine periods when rates have been on the decline since 1974. The median return during those periods was 13.3%. Returns have been positive in six of those nine cycles. "Using history and prior Fed cutting cycles as a guide, some upside potential may remain for the second half of 2025," Jeff Buchbinder, LPL's chief equity strategist, said in the August 5 report. "But of course, past performance does not guarantee future results, and a new tariff regime not seen since the 1930s could slow earnings growth and fuel volatility." The largest market surges came in the lead up to the dot-com bubble, when the S&P 500 rose 161% from 1995 to 1999, the analysis showed. Other big gains included 62.8% from 1984 to 1993, and 38.2% from 2019 to 2021. But rate cuts aren't always a tailwind, especially during recessionary periods where the Fed acts too late. The market fell 23.5% during the 2007-2009 rate-cutting cycle, and from 2001-2004, the S&P 500 dropped 9.6%. This time around, Buchbinder said it's not a sure thing that rate cuts will be a boon for stocks, with ebullient investor sentiment having pushed up the market to new highs despite uncertainty remaining about the health of the economy. The market has also risen 12% already since the Fed's first cut of the cycle last September. "The delayed effects of trade policy are likely to weigh on the economy in the second half, leading to weaker labor market demand," Buchbinder wrote. "Recent market complacency toward trade policy and an economic narrative dependent upon strong economic data has caught our attention in recent weeks as a potential point of weakness." It's also not a guarantee the Fed continues to ease policy in the months ahead. Economists at Morgan Stanley and Bank of America both see the central bank keeping rates steady for the rest of 2025 despite CME FedWatch data showing investors pricing in 93.2% odds that the Fed cuts in next month. Given the apparent heightened levels of risk at the moment, Buchbinder said a conservative approach could be the best way forward in the near term. The firm likes growth stocks, large caps, and the financials and communication services sectors, he said. "Bottom line, investors may be well served by bracing for occasional bouts of volatility given how much optimism is currently reflected in equity prices," Buchbinder said. The firm's short-term asset allocation committee "advises against increasing portfolio risk beyond benchmark targets currently and continues to monitor tariff negotiations, economic data, earnings, the bond market, and various technical indicators to identify a potentially more attractive entry point to add equities on weakness," he added. Read the original article on Business Insider Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
