Goldman Sachs Exchanges More gains ahead for US stocks?
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Oct 15, 2024 
David Kostin, a US equities expert from Goldman Sachs Research, and Ryan Hammond from the portfolio strategy team discuss the remarkable 25% rally of the S&P 500 this year. They dive into the impact of mega-cap tech stocks and the potential for mid-cap equities. The duo also examines the cyclical phases of the AI industry, emphasizing key players like NVIDIA. Additionally, they share insights on the upcoming earnings season, investor sentiment, and projections for the S&P 500 leading up to 2025, reflecting optimism amid uncertainties.
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S&P 500 Rally Drivers
- The S&P 500 rally was driven equally by earnings growth and valuation expansion.
- This differs from 2023, where 75% of returns came from increased valuation.
Strong Earnings Growth
- Earnings growth is exceeding expectations, driven by a strong economy and micro-factors.
- These factors include semiconductors, mega-cap tech stocks, and one-time charges.
S&P 500 Valuations
- S&P 500 valuations are stretched historically, trading at a high percentile versus history.
- However, considering the macro backdrop, valuations are roughly in line with fair value.