Goldman Sachs Sees Stock Market Strength Despite Fed Rate Hike

Investors are pricing in a higher likelihood of a Federal Reserve rate hike following an unexpected increase in US core CPI inflation in August.

According to Goldman Sachs, a rate hike may not be enough to slow down the US stock market. In fact, Jonathan Shugar, Head of Cross Asset Sales at Goldman Sachs FICC and Equities, believes that the stock market could continue to strengthen due to strong earnings growth from US companies in the second quarter.

Shugar points out that stock valuations are around their 10-year average and not excessively high. He also notes that a Fed rate hike is unlikely to hinder investment in the artificial intelligence sector, as AI companies have continued to perform well despite rising interest rates.