Goldman Sachs: Interest rate fluctuations are unlikely to affect the returns of S&P 500 index component stocks.

The recent decline in the US stock market contrasts sharply with the rise in interest rates, as investors consider the impact of stronger-than-expected economic data on the Federal Reserve's monetary policy. Goldman Sachs strategists said that while historically interest rate fluctuations can affect stock prices, the impact on earnings of large US companies may be limited. Goldman Sachs strategist David Kostin said in a report on January 17th, "The recent performance of the US stock market is generally consistent with changes in yields, but we expect that in the coming months earnings growth - rather than changes in valuation - will be the main drive of stock market returns." "The recent decline in the S&P 500 index almost entirely reflects the typical experience of a sharp rise in interest rates." Data shows that the S&P 500 index has fallen by about 3% since early December last year until last weekend. Last Monday, the yield on the benchmark 10-year US Treasury bond rose by 64 basis points to a high of 4.8%, while the real yield rose by 43 basis points. Goldman Sachs rate strategists noted that as inflation slows down and provides room for interest rate cuts for Federal Reserve policymakers, by the end of this year, the yield on the 10-year US Treasury bond will decrease to 4.4%. Goldman Sachs stated: "If interest rates continue to exceed our expectations, it will affect earnings and valuation multiples. However, the direct impact of rising rates on earnings per share of S&P 500 index components should be very small. In order for higher yields to have a substantial impact on earnings prospects, it must be achieved by tightening the financial environment to restrict economic growth."