S&P 500 and Fed Funds Target Rate When the Fed cuts rates outside of a recession, U.S. stocks typically perform well, benefiting from easier borrowing conditions, stronger earnings prospects, and shifts in investor risk preferences. Image: Bloomberg
Valuation – S&P 500 Forward P/E Multiple The five largest S&P 500 stocks are trading well above their historical valuation norms—reflecting strong investor confidence in their earnings power and growth prospects—yet their valuations remain below previous peak levels. Image: Goldman Sachs Global Investment Research
Magnificent Seven and S&P 500 – 12-Month Trailing EPS The strong earnings power and consistent profit growth of the largest U.S. companies have been key factors in maintaining their dominant positions in the U.S. equity market over the past decade. Image: Goldman Sachs Global Investment Research
EPS – GS Top-Down vs. Consensus Bottom-Up Estimates A 14% consensus EPS growth forecast for the S&P 500 next year may be plausible, but some analysts regard it as optimistic, awaiting further confirmation from corporate earnings and macroeconomic developments. Image: Goldman Sachs Global Investment Research
U.S. Tech Stocks Since April lows, tech stocks rebounded strongly on AI growth and solid earnings, but high valuations and margin pressures from ongoing AI infrastructure investments could lead to volatility in coming quarters. Image: Yahoo Finance
Bottom-Up Consensus S&P 500 EPS Estimates Bottom-up consensus estimates show S&P 500 EPS growth slowing to 4% year-over-year in Q2 2025, highlighting a cautious earnings environment amid ongoing revisions and sector challenges. Image: Goldman Sachs Global Investment Research
U.S. GDP vs. S&P 500 EPS The strong correlation between GDP growth and S&P 500 EPS underscores the importance of cautious investment strategies, particularly given current high market valuations and optimistic earnings forecasts. Image: Real Investment Advice
CAPE Valuations vs. 10-Year U.S. Interest Rates Rising interest rates often have a significant impact on equity market valuations, frequently causing valuation reversals, especially for growth stocks and companies with high valuations based on future earnings expectations. Image: Real Investment Advice
S&P 500 Level and EPS Driven by expectations of robust earnings per share growth, Goldman Sachs has set its 12-month S&P 500 price target at 6,300. Image: Goldman Sachs Global Investment Research
Global EPS Model vs. Consensus EPS BofA indicates a trend of slowing growth in its global earnings per share model, reflecting a shift toward a more cautious economic outlook. Image: BofA Global Investment Strategy
S&P 500 EPS and Index Level Forecasts Over time, stock prices are driven by earnings. According to Goldman Sachs, the S&P 500 is expected to see earnings per share growth of 8% in 2024 and 6% in 2025. Image: Goldman Sachs Global Investment Research