Goldman Sachs raises global equities short-term rating to 'overweight', S&P 500 Q3 earnings growth expected to reach 27%.

BlockBeats news, October 12 - Goldman Sachs upgraded its global equity rating from "neutral" to "overweight" for the next three months and maintained its bullish stance for the next 12 months. Goldman Sachs believes that sustained corporate earnings growth, equity valuations retreating from summer highs, and reduced investor positioning have improved the risk-reward ratio for equities.

FactSet data shows that the S&P 500's forward 12-month price-to-earnings ratio has fallen from 21.1 times in early June to 19.1 times, compared with about 22 times at the start of the year. Goldman Sachs expects S&P 500 constituent companies' third-quarter earnings to grow 27% year over year, on track for a third consecutive quarter of earnings growth exceeding 25%, with AI infrastructure investment remaining an important driver.

In terms of regional allocation, Goldman Sachs maintained its "overweight" rating on U.S. and Asian equities and its "underweight" rating on European equities. At the same time, the bank upgraded government bonds to "overweight" for the next 12 months and recommended a "barbell strategy," with technology stocks at one end and stocks with bond-like characteristics at the other, while favoring shorter-duration bonds and cash assets.

Goldman Sachs also warned that rising U.S. Treasury yields, higher energy prices, and uncertainty surrounding the U.S. midterm elections could still intensify market volatility. Its bullish view still depends on continued delivery of corporate earnings and no further deterioration in financial conditions.