Goldman Sachs has blunt message for stock market investors

Goldman Sachs doesn’t think the bull market is over.

At the same time, though, the bank’s analysts feel it’s imperative not to ignore the risk either.

According to Seeking Alpha reporting, after a spirited rally in tech stocks and a massive month for the Nasdaq 100, Goldman strategist Tony Pasquariello says the market’s near-term setup has become much more complicated.

Nevertheless, Pasquariello argues that the primary U.S. stock uptrend remains intact.

That clarity was warranted, considering how quickly the market shifted from fear to confidence.

Five consecutive weeks wiped out the losses from the five down weeks that preceded them, on the back of healthy economic data, robust earnings, and an improving sentiment.

Consequently, Pasquariello feels investors cannot avoid “losing sight of the big picture,” calling the current environment a bull market.

I recently covered Morgan Stanley’s Michael Wilson, who also sees the bull market holding up.

Wilson also sees earnings strength doing much of the heavy lifting, with pullbacks likely to remain shallow.

In some ways, Morgan Stanley’s take is more reassuring, as it believes the risks are already priced in.

That said, Goldman Sachs still sees the S&P 500 jumping to 7,600, but it also sees a market where hedging is important.

The tremendous earnings backdrop has been a critical support for the S&P 500.

According to FactSet, 63% of companies have reported so far in Q1, with blended earnings growth tracking at 27.1% year over year, over 50% above pre-season expectations.

In fact, results so far suggest that Q1 could potentially be the strongest quarter since Q4 2021. Also, revenue growth is running at 11.1%, while analysts have bumped full-year S&P 500 EPS estimates since the earnings season began.

Tech and AI lead the rally, but not every sector is joining in

The stock market’s moved higher over the past three months, but the rally hasn’t been evenly spread.

More Tech Stocks:

The tech-heavy S&P 500 jumped from the high 6,800s to around 7,200, while the Nasdaq has pushed from lows of 23,000 to about 25,000, with AI-linked names doing most of the heavy lifting.

On the flipside, the Dow has been more sluggish, holding near 40,000, while small-cap stocks continue to show better momentum.

Sector-wide performance tells a different story.

Tech was the clear front-runner, with the S&P 500 ETF Trust up roughly 11% over the past six months, and energy was also in the green (on the back of elevated oil prices).

However, financials and industrials have been much more uneven, making this a constructive market but not one that’s fully broadened out.

S&P 500 year-end closes and returns

• 2020: The S&P 500 closed at 3,756.07, up 16.3% year over year.

• 2021: The S&P 500 closed at 4,766.18, up 26.9% year over year.

• 2022: The S&P 500 closed at 3,839.50, down 19.4% year over year.

• 2023: The S&P 500 closed at 4,769.83, up 24.2% year over year.

• 2024: The S&P 500 closed at 5,881.63, up 23.3% year over year.

• 2025: The S&P 500 closed at 6,845.50, up 16.4% year over year.

• As of May 4, 2026 close of 7,200.75, the S&P 500 was up 5.2% year to date and up 6.3% over six months.
  Source: FRED/S&P Dow Jones Indices.

Goldman sees strong data keeping stocks supported

Pasquariello feels the rally still has support from the numbers that matter most, including jobs, earnings, and corporate guidance.

The labor market is a critical piece of that puzzle.

Initial jobless claims dropped to their lowest level since 1969, indicating the economy is still holding up despite higher rates, inflationary pressures, and fears of a major slowdown.

The earnings picture has been even more important.

• Q1 earnings growth exceeded expectations by more than double, giving the rally a remarkably stronger foundation.

• About 61% of S&P 500 companies have beaten estimates by a wide margin so far.

• Goldman said the earnings scorecard was perhaps the best beat/miss performance in 25 years, apart from the unusual 2021 reopening period.

On top of that, the strength supports Goldman’s forecast of 2.1% GDP growth and 12% earnings growth, with the S&P 500 jumping to 7,600, up from nearly 7,200 now.

At the same time, though, Pasquariello isn’t calling this a risk-free market.

The Nasdaq 100 posted a powerful 15.6% monthly gain, its largest in over 23 years, which makes the near-term risk-reward far less attractive.

Additionally, he stoked fears that systematic investors may have finished buying, while inflation could prevent the Fed from delivering additional rate cuts.

Latest Wall Street price targets for the S&P 500

Related: Bank of America resets Apple stock price target after earnings

This story was originally published by TheStreet on May 5, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.