Bloomberg Talks Goldman Sachs Chief US Equity Strategist David Kostin Talks Seeing Fed Cutting Rates Three Times
Jul 9, 2025
David Kostin, Goldman Sachs' US chief equity strategist, shares his insights on the market outlook shaped by recent federal spending approvals and anticipated Federal Reserve rate cuts. He predicts the S&P 500 Index could reach 6,600 by year's end, driven by investor confidence. The discussion also delves into how tariffs are affecting corporate margins and growth, alongside a fascinating evaluation of the evolving AI landscape. Kostin emphasizes the importance for businesses to adapt to stay competitive in this shifting economic environment.
AI Snips
Chapters
Transcript
Episode notes
Tariffs Impact on Earnings
- Tariffs are factored into forecasts with expected earnings growth of 7% for this year and next.
- Mid-teen tariff rates are assumed, with companies absorbing some costs due to strong profit margins.
Clarity Spurs Market Confidence
- Federal spending clarity boosts confidence for capital spending and dividends.
- Fed expected to cut rates thrice starting September, supporting a bullish S&P 500 target of 6,600 end of year.
Narrow Market Rally Dynamics
- The recent 25% S&P 500 rally is narrow, driven mainly by large companies.
- Median and small-cap stocks are down about 10-11%, signaling opportunities in undervalued sectors.