The US stock market, which hit a record high, faces a "profitability test"! Goldman Sachs warns that the S&P 500 EPS growth rate may reach the lowest level in two years.

The latest research report from Goldman Sachs Group, Inc. pointed out that as the impact of the Trump administration's trade war continues to escalate, the upcoming second quarter earnings season for US stocks will be a key window to test companies' profitability. The chief strategist at the institution, David Kostin's team, issued a warning that this round of earnings reports will directly reflect a profit shock of around 10 percentage points from the increase in tariffs, which also means that the S&P 500 index, which hit historical highs, as well as the Nasdaq 100 index covering top US technology companies also hitting historical highs, will face a "profit test." Although companies generally expect to pass on additional costs to consumers by raising prices, analysis by Goldman Sachs Group, Inc. indicates that if the actual pass-on rate is lower than expected, US companies' gross profit margins will face significant pressure. This concern has already been evident in the performance forecasts of some industry leaders: food giant General Mills, Inc. (GIS.US) suffered cost pressures due to tariffs, causing its stock price to plummet by 5% last week; while sports brand NIKE, Inc. Class B (NKE.US), with supply chain optimization measures, successfully absorbed the impact of tariffs, leading to a 15% increase in its stock price. This divergent trend reflects the differences in industries' ability to cope with trade frictions. From a macro perspective, the earnings growth rate of S&P 500 index component stocks in the second quarter is expected to slow significantly. Data shows that analysts generally expect a year-on-year increase of only 2.6% in earnings per share (EPS) for US stocks from April to June, which also means that the S&P 500 index's EPS growth rate will be at its lowest level in nearly two years. This expectation is in stark contrast to the beginning of the year, when corporate profits were still growing in double digits. Market analysis believes that the unprecedented trade disputes are impacting corporate profits through cost increases and demand suppression, causing the S&P 500 index to fall by as much as 19% in April. Despite benefiting from the AI investment boom, which has pushed up the stock prices of technology giants with high weights in the S&P index, signs of US economic recovery, and optimistic expectations for a rate cut by the Federal Reserve, the index has now rebounded to near historical highs. However, corporate profit fundamentals may constrain potential upside. It is worth noting that there may be differences in the market's pricing of trade frictions. The report from Goldman Sachs Group, Inc. specifically points out that although the impact of tariffs is partly reflected in market expectations, the transmission speed and digestion capacity in different industries still need to be verified through earnings season. This uncertainty has led institutional investors to remain cautious at high valuationsespecially for high-valuation technology giants reaching historical highs, with some funds starting to tilt towards consumer essentials with cost transfer capabilities and manufacturing industries with global supply chain advantages.