Corporate earnings continue driving equity markets higher
Global stock markets are holding near record levels despite the continued closure of the Strait of Hormuz and mounting concerns over slowing growth and persistent inflation, according to Goldman Sachs.
In a note led by strategist Peter Oppenheimer, the bank argued that strong corporate earnings remain the primary force supporting equities.
“earnings growth is robust,” Goldman wrote, pointing to projected nominal global GDP growth of 5.9% this year, compared with 4.7% in 2025.
AI spending and energy prices fuel market momentum
Goldman said the rally has been powered mainly by technology and energy stocks.
Analysts’ consensus estimates for S&P 500 earnings per share in 2026 and 2027 have both been revised upward by 8 percentage points so far this year, driven largely by expectations for stronger artificial intelligence investment and elevated oil prices.
The bank noted, however, that the market advance remains unusually concentrated.
The S&P 500 is up about 10% year to date in 2026, with technology, media and telecom stocks responsible for roughly 85% of those gains.
South Korea, which has benefited significantly from the global semiconductor boom, has rallied nearly 80% this year.
Goldman sees signs of excessive market optimism
Despite the ongoing rally, Goldman warned that several warning signals are beginning to emerge.
The bank said its Risk Appetite Indicator moved above 1.1 last week, reaching the 99th percentile of historical readings going back to 1991.
Retail trading activity has also surged, with volumes climbing 28% since mid-April.
Meanwhile, rising bond yields have continued to compress equity risk premia.
Goldman cautioned 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.”
Bond market volatility could trigger a correction
The bank also highlighted rising government bond yields as a potential catalyst for a broader pullback in equities.
According to Goldman, increasing government borrowing needs are placing upward pressure on long-term yields globally, creating an additional headwind for stock markets as financial conditions become tighter.