Goldman Sachs & Co. LLC Research Hub

Goldman Sachs research indicates a market characterized by stretched sentiment and "unwindy" price action as the S&P 500 grapples with rising rates and a significant momentum factor drawdown. Firm data highlights that while global equity sentiment remains bullish, risk appetite has reached the 99th percentile, with GS Prime Brokerage gross leverage hitting a five-year high and CTAs holding a $95 billion long position. A notable rotation is occurring under the surface, specifically from Semiconductors into Software following Computex commentary, alongside a slight buy skew in the Energy sector from both hedge funds and long-only investors. Macro headwinds are prominent as the US 10-year yield reached 4.67%, a 2-standard deviation move that has intensified the negative correlation between equities and bond yields amid poor liquidity. Within the consumer space, earnings results have been largely positive, highlighted by Target's 5.6% comparable sales beat and CAVA's robust 9.7% growth. Despite these pockets of strength and robust corporate buyback activity, declining market breadth and bearish derivative flows signal potential near-term headwinds for broader indices.