Goldman Sachs has raised its three-month rating on global equities to overweight from neutral while keeping a bullish 12-month stance, according to a BlockBeats report published on Oct. 12. The bank said the risk-reward profile for stocks has improved as corporate earnings continue to grow, valuations have pulled back from summer highs, and investor positioning has declined.
FactSet data cited in the report showed the S&P 500’s forward 12-month price-to-earnings ratio fell to 19.1x from 21.1x in early June, compared with about 22x at the start of the year. Goldman expects third-quarter earnings for S&P 500 companies to rise 27% year over year, which would mark a third straight quarter with earnings growth above 25%. It said investment in AI infrastructure remains a key driver.
On regional allocation, Goldman kept overweight ratings on U.S. and Asian equities and maintained an underweight view on European stocks. The bank also upgraded its 12-month rating on government bonds to overweight and recommended a barbell strategy, pairing technology stocks with equities that have bond-like characteristics, while favoring shorter-duration bonds and cash. Goldman warned that rising U.S. Treasury yields, higher energy prices, and uncertainty around the U.S. midterm elections could still increase market volatility.
Goldman Sachs has upgraded its three-month view on global equities to overweight from neutral and kept its bullish 12-month stance, according to BlockBeats on Oct. 12.
The bank said the risk-reward setup for stocks has improved because corporate earnings are still growing, equity valuations have retreated from summer highs, and investor positioning has come down. FactSet data cited in the report showed the S&P 500’s forward 12-month price-to-earnings ratio fell to 19.1x from 21.1x in early June, versus about 22x at the start of the year.
Earnings outlook and regional allocation
Goldman expects third-quarter earnings for S&P 500 constituents to increase 27% from a year earlier. That would put the index on track for a third consecutive quarter of earnings growth above 25%. The bank said spending on AI infrastructure remains an important driver.
In regional positioning, Goldman maintained overweight ratings on U.S. and Asian equities, while keeping European equities at underweight.
Bond call and market risks
Goldman also raised its 12-month rating on government bonds to overweight. It recommended a barbell strategy, with technology stocks on one end and equities with bond-like characteristics on the other, while favoring shorter-duration bonds and cash holdings.
The bank also warned that higher U.S. Treasury yields, rising energy prices, and uncertainty tied to the U.S. midterm elections could add to market volatility. Its bullish view still depends on continued delivery of corporate earnings and on financial conditions not worsening further.
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