Goldman Sachs: No need to wait for the midterm elections, the 'Goldilocks' scenario may ignite the year-end rally in US stocks ahead of schedule.

BlockBeats news, September 27: Goldman Sachs believes the market may currently be overpricing stagflation and upside risks to U.S. Treasury yields. As tariff impacts diminish, energy prices potentially retreat, and AI technology drives cost reductions, U.S. inflationary pressures are expected to ease; meanwhile, although economic growth may slow, corporate core earnings remain resilient. In this "Goldilocks" scenario, enthusiasm for AI investment could reignite, and the year-end rally in U.S. stocks may not need to wait until after the U.S. midterm elections to begin.

Mark Wilson, a partner at Goldman Sachs Group, said recent market movements have already shown related signs, with AI-related assets regaining capital favor after months of consolidation. Goldman Sachs economist Jan Hatzius believes the upside risks to U.S. economic growth are weakening. As the effects of fiscal stimulus fade and gasoline prices and mortgage rates rise, economic growth may slow further, which would also limit the room for central banks to continue raising interest rates.

Ben Snider, head of Goldman Sachs' U.S. strategy team, believes that although some industries are experiencing temporary "excess earnings," corporate core earnings are likely to maintain strong growth at least through the end of 2027. Based on this, Goldman Sachs believes that if inflation continues to fall, economic growth slows moderately, and corporate earnings remain resilient, the market may gradually shift from the previous stagflation trade to a "Goldilocks" scenario.