US Weekly Kickstart

Latest edition · September 11, 2026

US Weekly Kickstart The impact of higher interest rates on equities in charts

Goldman Sachs examines the impact of surging Treasury yields and anticipated Fed tightening on US equities. While higher rates compress forward P/E multiples, the firm expects the equity bull market to continue driven by solid earnings growth and resilient corporate balance sheets.

With the 10-year US Treasury yield surging toward 5% and the Fed expected to hike 25 bp next week, Goldman Sachs analyzes how higher interest rates affect US stocks. Although S&P 500 forward P/E multiples have compressed from 22x to 19x, equity valuations relative to bonds remain steady, with the equity risk premium near 3%. Historically, US stocks experience modest initial headwinds at the onset of Fed rate hiking cycles (-2% over 3 months) before rebounding (+9% over 12 months). Large-cap balance sheets remain insulated by fixed-rate, long-duration debt, with interest coverage near the 99th percentile. Finally, companies are positioned to offset cost-of-equity headwinds by accelerating growth via AI investments, capex, and M&A.

Key takeaways from the latest edition

• 1.Rising interest rates present a valuation headwind, but corporate earnings remain the primary driver of equity performance, supporting continued bull market upside.
• 2.The S&P 500 equity risk premium stands at approximately 3% (270 bp yield gap) and has remained stable over the past two years despite P/E multiple contraction.
• 3.While equities historically experience brief turbulence (-2% median 3-month return) at the onset of Fed hiking cycles, they typically rally +9% over the subsequent 12 months.

What this series covers

• What higher interest rates mean for US stocks
• S&P 500 earnings and return forecasts
• Biggest stock movers this week
• Sentiment and flows
• Economic growth
• Interest rates and financial conditions
• Market breadth and concentration
• Correlation and volatility
• IPO Barometer and mutual fund performance
• Earnings growth
• Valuations
• YTD absolute and risk-adjusted returns
• Sector returns, earnings, and valuations
• Thematic baskets
• Factors
• Goldman Sachs global macro research cross-asset forecasts

Edition archive

• US Weekly Kickstart The impact of higher interest rates on equities in charts

  September 11, 2026

• US Weekly Kickstart Equity issuance is a headwind but not a gale

  August 7, 2026

• US Weekly Kickstart Q2 2026 mid-season earnings update

  July 31, 2026

• US Weekly Kickstart The 2026 midterms and US equities

  July 24, 2026

• US Weekly Kickstart What the Fed policy outlook means for equities(1)

  July 10, 2026

• US Weekly Kickstart S&P 500 Q2 2026 earnings season preview

  June 26, 2026