Goldman Sachs: Rate hikes will not derail the stock market bull run

BlockBeats news, September 14 - When the Federal Reserve begins to raise interest rates, the stock market typically faces pressure, but Goldman Sachs expects the bull market to continue. Strategists led by Ben Snider stated that rising interest rates pose a headwind to equity valuations, but corporate earnings remain the most important driver of the stock market.

The forward price-to-earnings ratio of the S&P 500 index has dropped from 22 times at the beginning of the year to 19 times currently, but the index is still within 2% of its record high. The report noted that the market has already priced in expectations of more than three rate hikes within the next year, and both corporate earnings and balance sheets are performing strongly. Over the past few decades, in the first three months of seven rate hike cycles, the S&P 500 index fell by an average of 2%, but rose by 9% within 12 months after the first rate hike.