Goldman Sees S&P 500 Falling 2% After Fed's First Rate Hike in 3 Years

2 articles · Updated · Yahoo Finance · Sep 14

A 90% market-implied chance of a quarter-point Fed hike on Wednesday has Goldman Sachs warning that stocks may be nearing a short-term trough rather than extending this year's rally.
Goldman said the S&P 500 has averaged a negative 2% return in the first three months of past hiking cycles, as tighter policy often dents growth expectations and ends high-valuation, concentrated bull markets.
The bank argued this cycle may be more rate-sensitive because the AI boom is unusually capital intensive, making equity valuations more vulnerable to a higher cost of capital.
Longer term, Goldman still sees resilience: the S&P 500 has averaged a 9% return over 12 months after hiking cycles began, though a 1-point rise in capital costs would require 2 points of extra long-term growth to offset.