Goldman’s Snider Says Narrow Earnings Strength Fuels Stock Rally
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jjjndipg(2bf6[8o8otj8)2h_media_dl_1.png high: SPX index less median stocArticle content(Bloomberg) — Narrow pockets of strength in analyst earnings revisions have powered the S&P 500 Index’s rally to a record high, according to Goldman Sachs Group Inc. strategists.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentWhile consensus earnings-per-share estimates for this year and next are 4% above where they were in January, energy and information technology stocks account for almost all of the increase, the strategists led by Ben Snider said. The Iran war has triggered a surge in energy prices, while tech stocks are benefiting from renewed optimism around artificial intelligence investment.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentOnly two names — Micron Technology Inc. and Exxon Mobil Corp. — together account for more than 60% of the consensus increase in 2026 S&P 500 EPS estimates since the conflict began, the strategists wrote. The median company in the index has seen no revision to 2026 earnings estimates in the past few months, they said. Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article content“Just a handful of stocks has driven the vast majority of the upward revisions to S&P 500 earnings estimates in recent weeks,” Snider said.Article contentThe US equity benchmark index closed at a record high on Friday, wrapping up its strongest week of 2026. But the Goldman strategists said the gains, like the bullish earnings revisions, weren’t broad-based.
The team’s preferred measure of market breadth has dropped to its lowest levels in recent decades, aside from the Dot Com bubble and mid-2023.Article contentThe test now is to see whether the heart of the first-quarter earnings season will lead to a broadening in upward profit revisions and in market strength, the Goldman team said. Progress in the potential reopening of the Strait of Hormuz is particularly key for economy-linked cyclical names.Article contentArticle contentThe earnings season has started strongly for large-cap US companies, with about 81% beating EPS estimates so far, according to data compiled by Bloomberg Intelligence. Banks dominated last week’s reporting, with JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc. and Goldman notching record stock-trading revenue.Article contentGoldman projects S&P 500 EPS growth of 12% this year, broadly in line with top-down strategist consensus views, but below the 18% bottom-up consensus forecast. Risks are two-sided and skewed to the upside, the strategists wrote. Downside threats are to weaker consumer demand and higher input costs linked to the war, and potential positives are tied to AI investment and productivity growth.Article contentTrending US Seizes Iranian Ship in Blockade, Casting Doubt on Peace Talks PMN Business Posthaste: Why Canadians might be doomed to suffer a 'new normal' for oil prices News Brace for gas price 'shock' in inflation numbers out Monday, say economists Economy A rise in mortgage rates may ‘pull the rug' out from under the spring housing market, says CREA Mortgages Disney debuts giant screen brand for cinemas to rival Imax Retail & Marketing Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. US Seizes Iranian Ship in Blockade, Casting Doubt on Peace Talks PMN Business Posthaste: Why Canadians might be doomed to suffer a 'new normal' for oil prices News Brace for gas price 'shock' in inflation numbers out Monday, say economists Economy A rise in mortgage rates may ‘pull the rug' out from under the spring housing market, says CREA Mortgages Disney debuts giant screen brand for cinemas to rival Imax Retail & Marketing