The historically high U.S. stock market faces an "earnings test"! Goldman Sachs warns that the S&P 500 EPS growth may hit a two-year low

According to the latest research report from Goldman Sachs Group, as the impact of the Trump administration's trade war continues to unfold, the upcoming Q2 earnings season for U.S. stocks will become a critical window for testing corporate profitability. The team led by Chief Strategist David Kostin issued a warning that this earnings season will directly reflect the profit shockwave caused by approximately a 10 percentage point increase in tariffs, which also means that the historically high U.S. stock market benchmark—the S&P 500 index—and the Nasdaq 100 index, which also reached a historical high and includes top U.S. technology companies, will face an "earnings test."

Although companies generally expect to pass on the increased costs to consumers through price hikes, Goldman Sachs analysis indicates that if the actual pass-through rate is lower than expected, U.S. companies' gross margins will face significant pressure. This concern has already surfaced in the earnings forecasts of some industry leaders: food giant General Mills (GIS.US) saw its stock price plummet 5% last week due to cost pressures from tariffs; meanwhile, sports brand Nike (NKE.US) successfully absorbed the impact of tariffs through supply chain optimization measures, with its stock price soaring 15%. This divergent trend reflects the varying abilities of different industries to cope with trade frictions.

From a macro perspective, the earnings growth rate of S&P 500 index constituents is expected to slow significantly in Q2. Data shows that analysts generally expect the year-on-year growth rate of earnings per share (EPS) for U.S. stocks from April to June to be only 2.6%, which means that the year-on-year growth rate of the S&P 500 index EPS is about to hit its lowest growth rate in nearly two years.

This expectation stands in stark contrast to the beginning of the year when corporate earnings were still maintaining double-digit growth. Market analysis suggests that the unprecedented trade dispute is impacting corporate profits through both cost push and demand suppression channels. The S&P 500 index fell as much as 19% from its peak in April, but has since rebounded to near historical highs, benefiting from the global AI investment boom that has driven the stock prices of tech giants with high weight in the S&P, signs of U.S. economic recovery, and optimistic expectations for Federal Reserve interest rate cuts. However, the fundamental corporate earnings may constrain potential upside space.

It is worth noting that there may be discrepancies in how the market is pricing in trade frictions. The Goldman Sachs report specifically points out that while the impact of tariffs has been partially reflected in market expectations, the transmission speed and absorption capacity across different industries still need to be verified through the earnings season. This uncertainty has led institutional investors to remain cautious at high valuation levels—especially regarding high-valuation tech giants that have reached historical highs, with some funds beginning to shift towards consumer staples with cost pass-through capabilities and manufacturing sectors with global supply chain advantages