What do top traders at Goldman Sachs think about the historic highs of the US stock market?

As U.S. stocks hit new historical highs, investor optimism about the future continues to rise.

Last Friday, driven by easing tensions in the Middle East and expectations of interest rate cuts, the Dow Jones Industrial Average surged over 400 points, while both the Nasdaq and S&P 500 reached all-time highs, and the yield on the 10-year U.S. Treasury bond fell significantly by 10 basis points.

A sentiment survey conducted by Goldman Sachs' equity sales and trading department shows that trading experts across eight major sectors—TMT (Technology, Media, Telecommunications), Financials, Healthcare, Consumer, Industrials, Energy, and Utilities—generally believe that the current risk appetite environment "looks quite good," with traders describing the current investor mindset as "the market is inherently set to recover, but humans are inherently distrustful of recovery."

Despite the overall optimistic sentiment, Goldman Sachs internally acknowledges that bulls may face some resistance in the coming weeks, but it may be "the weakest bearish outlook ever."

TMT Sector Strongest, Semiconductor Industry Shines

According to a summary report from Goldman Sachs' trading department, the sentiment in the Technology, Media, and Telecommunications (TMT) sector is the most positive, with a team led by Peter Bartlett, Peter Callahan, and Leyla Kamshad believing that the AI boom and macro improvements are continuously driving up valuations in this field, with significant capital inflows.

Looking at industry themes, semiconductors have become the fastest-growing industry within this sector, having risen 40% over the past 45 days, marking the best performance in over twenty years; meanwhile, the software industry's performance has been relatively lackluster, especially in terms of capital expenditure and return on investment.

The report states that the short-term outlook for semiconductor stocks depends on whether the ongoing AI narrative can overcome persistent uncertainties (such as tariff policies).

The report emphasizes that the "tariff deadline" on July 9, the Amazon Prime Day promotion starting on July 8, and the Q2 earnings season will be important catalysts moving forward.

Improved Interest Rate Environment Boosts Bank and Insurance Stocks, Financial Sector Also Leads

The financial sector also exhibits optimistic sentiment, with Alex Mitola and Christian DeGrasse noting that investor expectations for an improved interest rate environment have boosted the performance of bank and insurance stocks.

Goldman Sachs states that the bullish sentiment in these two industries has directly driven the strong performance of U.S. stock indices, serving as a signal for investors with heavy allocations in technology and finance to continue increasing their positions.

The report points out that over the past month, stablecoins, bank loans, capital market activities, and retail trading themes have been the biggest turning points in the financial sector; next month's Federal Reserve annual stress test results and the Q2 earnings season are important catalysts for this sector.

Consumer and Healthcare Sectors Overall Stable

The sentiment in the consumer and healthcare sectors is relatively stable, but there is internal differentiationThe consumer sector is led by Eric Mihelc and Scott Feiler, who believe that some sub-industries will benefit from economic recovery, but weak consumer spending may limit the upside.

The report states that over the past month, the gains in the consumer sector have mainly been driven by an improvement in the non-essential consumer goods trend, with most companies expecting good performance in May and June. Therefore, the upcoming tax reform bill and its impact on low-income consumers will be very important.

In the healthcare sector, PJ Gallo and Jon Chan point out that innovative pharmaceutical companies are favored by the market, but policy uncertainty remains a potential risk.

The report concludes that while the performance of these two industries is not as eye-catching as TMT, they still hold certain appeal for investors seeking defensive allocations.

Industrial and Energy Sectors Lean Towards Caution

The sentiment in the industrial and energy sectors is generally cautious.

The industrial sector is led by Amanda Ross and Ryan Novak, who believe that although order data has shown some improvement, the uncertainty in global supply chains still poses pressure.

From an industry theme perspective, the aviation sector leads, while the automotive and chemical sectors remain lagging, with attention on next month's economic data, ISM manufacturing index, and automobile sales data.

Amanda Ross and Adam Wijaya from the energy and utilities sector clearly state that the oil price outlook is bearish, with strong supply and slowing demand growth.

From an industry theme perspective, over the past month, the nuclear energy concept stocks have continued to heat up due to some super-large enterprises, technology companies, and several state governments in the U.S. showing a positive stance towards future deployment of nuclear power, with some individual stocks rising over 20% in a single month.

The focus going forward remains on oil price trends, with the report noting that due to OPEC+ expected to decide to continue increasing production at its monthly meeting on Sunday, this may continue to put downward pressure on international oil prices.