Goldman Sachs Partner John Flood Says Earnings Remain the Main Driver as S&P 500 Eyes Another Record This Year

Goldman Sachs partner John Flood said corporate earnings remain the strongest support for U.S. equities, with the S&P 500 potentially setting another record high before year-end as positioning becomes cleaner. Goldman’s data shows the index’s second-quarter earnings-per-share growth tracking at 45% year over year, far above the 22% consensus estimate at the start of the quarter. Even after stripping out non-recurring items tied to roughly $151 billion in equity investment-related “other income” from Alphabet and Amazon, plus about $3 billion of similar income from Microsoft, EPS growth still stands at 26%, the fastest pace since 2021. Goldman also said analysts have begun lifting 2027 earnings forecasts, with energy and financials seeing the largest revisions, while the breadth of upgrades remains positive across the index. On positioning, Goldman’s sentiment and positioning gauge has fallen to the 53rd percentile, hedge funds have cut leverage, and retail leverage is cooling across markets including South Korea, Japan, and U.S. semiconductor shares. Flood said that backdrop leaves the market in a healthier state, though Goldman flagged a seasonal risk: in 13 midterm election years since 1974, the median S&P 500 return from early August to Election Day was 0%.