As bond yields rise, Goldman Sachs still believes that the S&P 500 index has 10% upside potential.

Despite the rise in bond yields, Goldman Sachs continues to adhere to its projected target level, believing that the S&P 500 Index will reach 6,500 points in the next 12 months. Due to recent volatility in the U.S. Treasury market, the yield on the 10-year U.S. Treasury bond has climbed from 4% in the last week of April to the current 4.43%. The reason for this trend is investors' concerns about the impact of tariffs on inflation, as well as higher term premiums. In a recent report by Goldman strategist David Kostin, the effects of rising bond yields on the S&P index were analyzed, and the risks it poses to the stock market were evaluated. Goldman Sachs expects the year-end yield on the U.S. 10-year Treasury bond to be around 4.5%, and to rise slightly to 4.55% in 2026. These strategists firmly believe that the most important aspect of interest rate changes for the stock market is the driving factors and adjustment speed, rather than the absolute level of interest rates themselves. Kostin and his team stated that if the rise in yields is due to an increase in growth expectations, the stock market does not mind, but if the reasons are inflation or fiscal concerns, the stock market is more sensitive. Goldman Sachs points out that since the outbreak of the tariff dispute on April 2, clients have become more concerned about the relationship between rising yields and stock market returns, even though there is "no clear relationship" between the two. Kostin and his team predict that the forward price-to-earnings ratio of the S&P 500 Index in the next 12 months will remain largely unchanged over the next year, partially due to the fact that companies in the index typically hold longer-term fixed-rate debt.