Goldman Sachs Warns of Potential S P 500 Stalling Amid Economic Uncertainty, Revises 2025 EPS Growth Forecast to 9%

Goldman Sachs analysts, led by David Kostin, issued a warning on Monday regarding the potential for the S&P 500 rally to stall in the short term. This comes after a recent downturn where cyclical stocks underperformed defensive stocks by 9%, and the firm's momentum factor fell by 7%. Goldman's confidence indicator is at -0.4, below late November highs. The analysts believe that an improvement in the U.S. economic growth outlook is needed to reverse recent stock market rotations. The upcoming jobs report is a key test. Due to weaker-than-expected economic data, Goldman Sachs has revised its 2025 EPS growth forecast from 11% to 9%, while maintaining its 2026 estimate at 7%. Despite this, they reaffirm their year-end target of 6,500 for the S&P 500, citing that the stock market's valuation of economic growth prospects aligns with their economists' baseline growth forecasts. Goldman Sachs continues to recommend exposure to the healthcare sector.