Goldman Sachs Upgrades Equities to Overweight Citing Earnings Growth and Valuation Pullback

Goldman Sachs has upgraded its three-month allocation on equities to overweight from neutral, also lifting bonds to overweight over a 12-month horizon. The shift comes as the S&P 500 forward 12-month price-to-earnings ratio compressed to 19.1 from 21.1 in early June and 22.0 at the start of the year. Strategists led by Christian Mueller-Glissmann highlighted favorable asymmetry ahead of third-quarter corporate earnings, where analysts forecast S&P 500 profit growth of 29.6%. The bank recommends a barbell strategy pairing tech and AI beneficiaries with high-dividend, low-volatility shares.