Weekly Market Monitor
Chart of the Week: 2026 – An Earnings Story
After three consecutive years of strong US equity returns, we expect further gains in 2026, although at a more moderate pace. Earnings will likely be the primary driver of this advance, contributing 11% to GIR’s 12% total return forecast for the S&P 500. Although elevated valuations may increase vulnerability to episodic volatility, we think solid earnings and economic growth, alongside supportive monetary policy, argue for sticking to the plan in 2026 while maintaining appropriate hedges.
Source: Goldman Sachs Global Investment Research and Goldman Sachs Asset Management. As of January 6, 2026. The chart shows a breakdown of annual S&P 500 index returns into its three main drivers: earnings, valuation, and dividends, as well as the total return figure for each respective year. “Episodic volatility” refers to short-lived, temporary spikes in market unpredictability. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved. Please see additional disclosures at the end of this presentation. Past performance does not predict future returns and does not guarantee future results, which may vary. For illustrative purposes only. 'We' refers to Goldman Sachs Asset Management.
Download the full document, which includes the chart of the week and insights on market developments. On pages 3 and 4, we further recap equity sector, size and style returns, global index returns, as well as rates and spread movements and a monthly snapshot of global equity valuations.
Equity investments are subject to market risk, which means that the value of the securities in which it invests may go up or down in response to the prospects of individual companies, particular sectors and/or general economic conditions. Different investment styles (e.g., “growth” and “value”) tend to shift in and out of favor, and, at times, the strategy may underperform other strategies that invest in similar asset classes. The market capitalization of a company may also involve greater risks (e.g. "small" or "mid" cap companies) than those associated with larger, more established companies and may be subject to more abrupt or erratic price movements, in addition to lower liquidity.
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Emerging markets investments may be less liquid and are subject to greater risk than developed market investments as a result of, but not limited to, the following: inadequate regulations, volatile securities markets, adverse exchange rates, and social, political, military, regulatory, economic or environmental developments, or natural disasters.
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Economic and market forecasts presented herein reflect a series of assumptions and judgments as of the date of this presentation and are subject to change without notice. These forecasts do not take into account the specific investment objectives, restrictions, tax and financial situation or other needs of any specific client. Actual data will vary and may not be reflected here. These forecasts are subject to high levels of uncertainty that may affect actual performance. Accordingly, these forecasts should be viewed as merely representative of a broad range of possible outcomes. These forecasts are estimated, based on assumptions, and are subject to significant revision and may change materially as economic and market conditions change. Goldman Sachs has no obligation to provide updates or changes to these forecasts. Case studies and examples are for illustrative purposes only.
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