Earnings growth to continue, Goldman says, but US policy risks cloud outlook By

- Earnings growth will likely be Forex Group MT4 Mobile Downloada key future driver of US equities, although possible policy shifts during the upcoming Trump administration could impact the outlook for stocks, according to analysts at Goldman Sachs.

In a note to clients, the analysts led by David Kostin noted that quarterly profits from the 84% of companies in the benchmark that have already reported results rose by 8% versus the year-ago period, better than prior expectations for growth of 3%.

Crucially, artificial intelligence chip designer Nvidia (NASDAQ:) -- one of the index's largest constituents and a figurehead of booming enthusiasm around the nascent technology -- is still to post its returns on Nov. 20.

Expansion in per-share income has been fastest in the communication services and information technology, rising by 22% and 20%, respectively. However, this was offset by a 29% drop in the energy sector, reflecting a recent drop in prices.

"One way to characterize the [third-quarter] reporting season is 'back to normal,'" the Goldman Sachs analysts wrote. "The frequency of earnings beats normalized after several stellar quarters. 51% of S&P 500 companies beat consensus [third-quarter] forecasts by at least a standard deviation of analyst estimates, above the long-term historical average of 49% but below the 57% average from the most recent six quarters."

They added that consensus earnings per share estimate revisions have also returned to a more typical "modest downward" trajectory after remaining stable for much of 2024 -- thanks in part to sunny forecasts for the so-called Magnificent Seven megacap players.

(LON:) year, S&P 500 earnings per share are now seen expanding by 11%. In 2026, the figure is tipped to climb by a further 7%, although the analysts said the estimates face both upside and downside risks from Trump's potential changes to tax and tariff policies.

On the campaign trail, Trump laid out a plan to slash domestic corporate tax rates to 15% from their current level of 21%. Each percentage point reduction could boost S&P 500 earnings by slightly less than 1%, the Goldman Sachs analysts predicted.

But Trump's proposed blanket levy of 10% to 20% on imports into the US, as well as heavy tariffs on China, could "reduce earnings via weaker consumer spenidng, retailatory tariffs on US exports, and increased uncertainty," the analysts flagged.

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