Earnings Surge Drives US Stock Bulls Towards New High

According to Goldman Sachs partner John Flood, strong corporate earnings are providing significant support for US stock bulls. The year-on-year growth rate of EPS for the S&P 500 in the second quarter reached a remarkable 45%, exceeding the initial expectation of 22% and marking the fastest growth rate since 2021.

Even excluding non-recurring items such as approximately $151 billion in 'other income' related to equity investments from Alphabet and Amazon, the S&P 500 EPS growth rate still reached 26%. The broad-based improvement in earnings is a key driver of analyst revisions, with consensus expectations for the S&P 500 index's EPS in 2027 being raised by about 1%.

Market positioning has also 'de-bubbled,' with hedge funds deleveraging and retail investors cooling off. Goldman Sachs believes that this cleaner positioning environment creates conditions for further market upside, potentially leading to a new historical high within the year.