Goldman Sachs upgraded its stance on global equities to “overweight” from “neutral” over the next three months, citing improving economic momentum, attractive valuations, and support from monetary and fiscal policies. They also maintained their “overweight” rating for the next 12 months, as global equities have surged to record highs due to optimism about the U.S. Federal Reserve cutting interest rates early enough to prevent a recession. The MSCI World Index, mostly U.S. stocks, has risen about 35% since April lows, rebounding from recession fears triggered by President Trump’s tariffs. Resilient corporate earnings and a more dovish Fed have led to higher year-end targets for the S&P 500, with Goldman raising its forecast to 6,800. Equities historically perform well during late-cycle slowdowns when recession risks are low and policy support is strong, as in the late 1990s and mid-1960s. However, Goldman downgraded its outlook on global credit to “underweight” for the next three months due to late-cycle dynamics and stretched valuations, and also downgraded cash to “underweight” over the 12-month horizon, warning of lower returns due to continued Fed easing.

Read more at Yahoo Finance: Goldman Sachs upgrades global equities on growth optimism, policy support