Goldman Sachs says investors need not wait for midterms as a year-end Goldilocks rally could arrive early

Goldman Sachs partner Mark Wilson said global equities are facing a clearer upside setup into year-end, arguing investors do not need to wait for the U.S. midterm elections before adding risk. In his view, markets have already priced in much of the stagflation risk, while a milder Goldilocks backdrop is starting to take shape. Goldman pointed to easing inflation pressure, softer growth expectations that could limit how hawkish central banks can remain, and still-solid core corporate earnings as the three main pillars behind that call. The bank also linked recent market action to renewed enthusiasm around artificial intelligence. After Meta introduced its Muse product, expectations for large-scale consumer adoption of AI accelerated, helping AI-linked assets including the Nasdaq break higher on Monday after three months of consolidation and position reductions that followed a historically strong second quarter. Goldman added that the latest rise in U.S. Treasury yields has been driven more by stronger-than-expected data such as PMI readings than by inflation fears, and said equities have continued to hold up despite rate volatility. On earnings, Goldman’s U.S. strategy team head Ben Snider said some companies are seeing excess profits, but the broader market does not yet show an earnings bubble. The firm said core earnings are still likely to remain notably strong through at least the end of 2027.