Strong earnings growth continues to support global equities
Global equity markets are continuing to trade near record highs even as the Strait of Hormuz remains closed and concerns about slowing growth alongside persistent inflation intensify, according to Goldman Sachs.
In a note led by strategist Peter Oppenheimer, Goldman said the main force supporting equities is resilient corporate profitability.
“earnings growth is robust,” the bank wrote, pointing to nominal global GDP growth projected at 5.9% for this year, up from 4.7% in 2025.
Technology and energy sectors dominate market gains
Goldman said the technology and energy sectors have been the primary drivers behind the market rally.
Consensus bottom-up forecasts for S&P 500 earnings per share in both 2026 and 2027 have already been revised upward by 8 percentage points this year, largely reflecting stronger expectations for artificial intelligence-related capital spending and elevated energy prices.
Despite the broader market strength, Goldman noted that gains remain highly concentrated.
The S&P 500 has advanced roughly 10% year-to-date in 2026, with technology, media and telecommunications stocks accounting for approximately 85% of the index’s overall gains.
South Korea, which has benefited heavily from the global semiconductor boom, has surged nearly 80% so far this year.
Goldman warns investor optimism may be stretched
While the rally has remained resilient, Goldman cautioned that several near-term risks are becoming more pronounced.
The bank said its Risk Appetite Indicator climbed above 1.1 last week, reaching the 99th percentile of readings dating back to 1991.
Retail trading activity has also accelerated sharply, with volumes rising 28% since mid-April.
At the same time, equity risk premia have continued to compress as bond yields move higher.
Goldman warned that “if oil disruptions continue into the second half of this year and inflation expectations rise further, there is a real risk of a speed bump for equity markets.”
Rising bond yields seen as potential market threat
The bank also identified the recent sharp increase in government bond yields as a possible trigger for a broader market correction.
According to Goldman, expanding government borrowing requirements are contributing to upward pressure on longer-dated yields across global markets, adding another layer of risk for equities as financing conditions tighten.