Investing.com – Goldman Sachs analysts say corporate earnings are on track to boost benchmark earnings in 2025, even as higher borrowing costs threaten to weigh on results.
Earlier this month, the U.S. It hit its highest price in months.
The rally weighed on the appeal of stocks that had soared following his November election victory on hopes that Trump would usher in an era of deregulation and tax cuts.
Yields have been falling in recent days, as weaker-than-expected U.S. core inflation in December reignited hopes for a Fed rate cut. Markets are also looking for more clarity on Trump’s proposals after he is sworn in as president on Monday.
Despite the drop in yields, analysts led by David Kostin warned that relatively high U.S. Treasury yields could have a “limited impact” on the numbers published by S&P 500 companies this year.
Analysts said in a note to clients that “if rising interest rates put pressure on economic growth, it could impact corporate earnings,” but the performance of a basket of cyclical and defensive stocks would be affected by the sharp rise in yields. He said it suggests that he has not. Traders’ optimism about the US growth outlook was undermined.
Analysts added that a basket of interest rate-sensitive stocks outperformed its peers despite rising U.S. Treasury yields.
Analysts said the market had “priced in too hawkishly” the Fed’s outlook, predicting that the 10-year Treasury yield is expected to fall slightly to 4.35% by year-end.
Meanwhile, earnings growth is expected to support a 9% upside to Goldman Sachs’ S&P 500 index target level of 6,500, analysts said. The index closed Friday’s trading at 5,996.66.
