Goldman Sachs suddenly shorting US stocks: Indexes outperform while individual stocks show clear polarization trends.

Recently, Goldman Sachs released a research report using the eerie phrase to describe the current performance of the US stock market, believing that the current US stock market is showing a pattern of differentiation, with the S&P 500 index maintaining surface strength while internal cracks continue to widen, making it difficult to form market consensus and instead more likely to trigger adjustments. Part.01 Surface strength and hidden concerns in the market The S&P 500 index has been above the 50-day moving average for 128 consecutive days, one of the longest consecutive rising periods on record. However, this strength only remains at the index level, with internal vulnerabilities becoming apparent. The number of stocks hitting 52-week lows far exceeds those hitting new highs, indicating serious internal differentiation in the market. Although the Nasdaq 100 index rose by about 2% last week and nearly 5% over the past two months, it faces technical resistance and concerns over the sustainability of the market intensified after tech stocks fell over the weekend combined with the Federal Reserve's "hawkish rate cut" stance. Part.02 Divergence between financial performance and market reaction The overall performance of the US stock market in this quarter's earnings season has been strong, with about 70% of companies in the S&P 500 index reporting earnings, 64% of which beat expectations, far higher than the long-term average of 49%, making it one of the strongest earnings seasons since the pandemic. However, the market did not reward companies that beat expectations proportionally, with these companies only outperforming the S&P index by an average of 32 basis points, significantly lower than the usual 98 basis points boost, reflecting a higher threshold for earnings expectations in the market. AI capital expenditure boom and potential risks AI-related capital expenditure continues to surge, with expectations raised by $500-600 billion over the next 12 months. Goldman Sachs predicts that by 2026, the capital expenditure of the four tech giants, META, GOOGL, MSFT, and AMZN, will reach $120 billion, $122 billion, $140 billion, and $161 billion respectively, with the expected total expenditure of large-scale enterprises in AI this year increasing by 60%. While this trend continues the narrative of a thriving AI industry, it also exacerbates market concerns over whether these investments will yield equal returns after 2026. Credit market and consumer environment weakening in sync The credit market is adopting a cautious stance in sync with the stock market, with debt-funded capital expenditures in AI triggering a new leveraged impulse. This year, AI-related bond issuance reached $220 billion, accounting for 29% of the total supply of US dollar bonds, with over 90% coming from the TMT and utility sectors. AI capital expenditure has replaced M&A as the primary financing driver, with the net supply of investment-grade bonds expected to climb to $670 billion by 2026, supporting bullish sentiment in the stock market while limiting the narrowing space of credit spreads. The consumer environment is also noticeably weak, with a weakening trend spreading from low-income groups to the 25-35 age group and middle-income groups. Retailers, restaurants, and tourism companies have all reported weak consumption, with some restaurants experiencing a decline in foot traffic and grocery store sales falling short of expectations, reflecting tight consumer budgets. Although digital consumption channels remain resilient and online consumption by high-income groups remains strong, the divergence between physical and digital consumption further highlights the fragility of the overall consumer market. Part.03 Investment strategy recommendations Goldman Sachs research believes that future growth momentum is expected to rebound, providing support for the stock market in early next year, with sentiment in cyclical sectors subdued and overall positions in negative territory, constituting potential support factors. However, the optimistic sentiment surrounding mega-cap tech stocks (accounting for approximately 35% of the index) has put the risk-return ratio at an unfavorable level, making it prudent to add hedging strategies at this time. In addition, Goldman Sachs has introduced a new low-quality stock basket (GSXULOWQ index), screening out fragile sectors with high leverage, poor profitability, and AI-related risks, suggesting investors could use it as a tactical hedging or short-selling tool.