Goldman: Markets are a little jittery right now

Market Sentiment - Current market sentiment is cautious, with concerns over high valuations and potential bubbles in AI capital spending, as the forward PE ratio on the S&P is at 23 times, compared to 25 during the tech bubble [2][3] - Despite companies beating earnings expectations, there is uncertainty about future performance, leading to jittery market conditions [3][4] Earnings Performance - Tesla missed profit expectations, while IBM beat expectations and raised guidance but still saw its stock trade lower, indicating mixed investor sentiment [1] - A significant rally of 38% off a low is noted, the largest in over 50 years, but a pullback of 3% to 5% is anticipated [5] Economic Outlook - The economy is perceived to be stronger than labor market indicators suggest, with no imminent bear market expected without a recession [6] - Upcoming fiscal and monetary stimulus in 2026 is expected to support earnings growth, with large caps projected to grow by 13.3% and small caps by 22% year-over-year [6] Currency Impact - The dollar has strengthened by over 1.5% in the last month, which may impact future earnings, especially as a weaker dollar has previously benefited earnings [7][8] - Record net capital inflows from foreign investments in U.S. treasuries are expected to support a rally in the dollar, potentially putting pressure on international investments [9] Healthcare Sector - The healthcare sector has been upgraded due to attractive valuations despite regulatory uncertainties and pressures from drug pricing reforms [11] - Long-term demographic trends, managed care demand, and biotech innovation are expected to provide strong tailwinds for the healthcare sector [12]