The stock market is usually under pressure when the Federal Reserve starts the rate hike cycle, but Goldman Sachs expects the bull market to continue. A team of strategists led by Ben Snyder said that rising interest rates will suppress stock valuations, but profit is the core driver of the stock market. The team said that the forward price-earnings ratio of the S&P 500 index has fallen from 22 times at the beginning of the year to 19 times the current high, but the index is still less than 2% from its all-time high. The strategist pointed out that the market is already estimating that interest rates will be raised more than three times in the next year, while corporate profits and balance sheet conditions will remain stable.

The stock market is usually under pressure when the Federal Reserve starts the rate hike cycle, but Goldman Sachs expects the bull market to continue. A team of strategists led by Ben Snyder said that rising interest rates will suppress stock valuations, but profit is the core driver of the stock market. The team said that the forward price-earnings ratio of the S&P 500 index has fallen from 22 times at the beginning of the year to 19 times the current high, but the index is still less than 2% from its all-time high. The strategist pointed out that the market is already estimating that interest rates will be raised more than three times in the next year, while corporate profits and balance sheet conditions will remain stable.