Goldman's Snider Sees 'Yellow Flags' in Equities

Summary

Goldman Sachs' Ben Snider discusses the narrow breadth of the S&P 500, where the index is at an all-time high but the median stock is 13% below its high, reminiscent of the dot-com era. He sees potential for a broadening rally if geopolitical risks and energy prices recede, and notes that earnings growth is supporting the market despite some margin pressure from higher costs.

• S&P 500 at all-time high but median stock 13% below its high.
• Gap between index and median is widest in 25 years, similar to dot-com bubble.
• Snider sees 'yellow flags' but base case is market broadening if conditions improve.
• Earnings growth for median S&P stock is strong at 12% this quarter.
• Higher energy costs are pressuring margins in many sectors.
• PE multiple is 10% lower than two months ago due to earnings tailwind.
• Unprofitable neocloud companies are still attractive in AI boom, but not explicitly tradeable.
• Snider emphasizes the earnings-driven nature of the current rally versus the dot-com era.