Global Equities Could Soar Further Into Year-End on Low Recession Risks and Monetary Easing, Goldman Sachs Turns More Bullish

Goldman Sachs has turned more bullish on global equities, upgrading its stance to “overweight” from “neutral” over the next three months, citing resilient economic momentum, supportive valuations, and growing policy support.

The strategist team, led by Christian Mueller-Glissmann, said equities tend to perform strongly during late-cycle slowdowns when policy is accommodative. “Good earnings growth, Fed easing without a recession, and global fiscal policy easing will continue to support equities,” they wrote in a note. The bank maintained its “overweight” rating on equities over a 12-month horizon.

Global stocks have recently hit record highs, buoyed by optimism that the Federal Reserve has started cutting rates early enough to stave off a recession. Renewed enthusiasm around artificial intelligence has also lifted major technology names, prompting several forecasters to raise their S&P 500 targets. Goldman itself lifted its three-month target for the benchmark to 6,800, implying further gains of about 2%.

Goldman pointed out that past late-cycle rallies — such as in the mid-1960s and late 1990s — saw equities perform well when recession risks were contained and policy support remained strong.

At the same time, the bank downgraded global credit to “underweight” from “neutral” over the short term, citing stretched valuations and late-cycle headwinds. It also warned that cash will likely underperform as Fed easing drives returns lower into next year.

Still, Goldman flagged risks from potential growth or interest rate shocks, with investors closely watching the upcoming corporate earnings season for the impact of global tariffs. Analysts expect S&P 500 earnings to rise 7.1% in the third quarter — the slowest pace in two years, according to Bloomberg Intelligence.