Goldman Sachs predicts earnings growth will drive additional upside in asset-heavy stocks, favoring industrial, energy, and materials sectors in the near term.
Goldman's call on asset-heavy stocks implies a bullish tilt for the S&P 500, as capital-intensive companies carry significant weight in the index. Earnings-driven gains in these sectors would likely lift the benchmark.
Industrials, energy, materials, and utilities are the primary asset-heavy sectors within the S&P 500.
If asset-heavy stocks rally on strong earnings, they could partially cushion any tech-led declines, but the net effect depends on relative sector weights and investor flows.
Goldman Sachs strategists argue that upcoming corporate earnings will propel more gains in companies with heavy physical assets, such as industrials and energy. The call reflects improving profitability in capital-intensive sectors as economic growth stabilizes. Investors may shift toward value and cyclical stocks.
Asset-heavy stocks belong to companies that require significant physical capital to operate, like factories, equipment, and infrastructure. Sectors include industrials, energy, utilities, and materials.
Goldman strategists believe that improving earnings in these sectors, driven by stable economic growth and higher commodity prices, will attract investors and push prices higher.
Asset-heavy companies are major constituents of indexes like the S&P 500, so their gains could lift the overall index, potentially triggering a rotation from growth to value stocks.