Goldman Sachs Forecasts Near-Term Stock Gains and 2026 Shift to Stock Picking

This analysis is based on the MarketWatch report [1] published on December 18, 2025, where Goldman Sachs (GS) outlined two key equity market themes: near-term gains over the next two weeks and a 2026 shift from broad market rallies to stock picking. The near-term forecast comes amid a recent 2.6% decline in the S&P 500 from its December 11 high to December 17 close, alongside a 4.0% drop in the NASDAQ Composite and a 0.35% dip in the Dow Jones [0]. Pre-market trading on December 18 shows mixed sector performance: defensive sectors like Consumer Defensive (+0.36%) and Energy (+0.22%) are slightly up, while Consumer Cyclicals (-2.21%) and Technology (-2.27%) lag [0]. GS’s own stock traded down 0.78% in pre-market activity [0].

This forecast aligns with Goldman’s earlier December 12 outlook [2], which projected 12% S&P 500 earnings growth to $305 in 2026, set a 7,600 target for the index (10% above then-current levels), and highlighted cyclical sectors (Industrials, Materials, Consumer Discretionary) as likely outperformers amid expected economic acceleration. The bank also noted moderating tech earnings growth (from 26% in 2025 to 24% in 2026) [2].

1. Active vs. Passive Shift
   : The 2026 focus on stock picking implies increased performance dispersion across individual stocks, potentially favoring active fund managers over passive index strategies [1][2].
2. Cyclical-Tech Rotation
   : The emphasis on cyclicals aligns with expectations of economic acceleration in 2026, contrasting with the tech-driven broad rally of 2025 [2].
3. Near-Term Sentiment Contrast
   : The forecast of near-term gains provides a counterpoint to recent market weakness, suggesting GS expects a short-term sentiment shift or unpriced catalysts [1][0].

• Near-Term Forecast Failure
  : If projected gains do not materialize in the next two weeks, it could reduce market confidence in Goldman’s short-term outlook [1].
• Cyclical Sector Dependency
  : Cyclical outperformance relies on 2026 economic acceleration, which could be disrupted by geopolitical events, policy shifts, or unforeseen macro shocks [2].
• Dispersion Volatility
  : Increased stock-specific volatility from the shift to stock picking may challenge passive investors [1].

• Active Management Upside
  : Active managers with strong stock selection skills could capitalize on the 2026 environment [1][2].
• Cyclical Sector Potential
  : Investors may find opportunities in cyclicals if economic conditions align with Goldman’s projections [2].

Goldman Sachs, via a MarketWatch report [1], forecasts near-term stock market gains over the next two weeks and a 2026 shift to stock picking. This follows a recent 2.6% S&P 500 decline (Dec 11-17) [0], with pre-market Dec 18 showing GS stock down 0.78% and mixed sectors [0]. Earlier, Goldman projected 2026 S&P 500 EPS growth of 12% to $305, a 7,600 index target, and cyclical sector outperformance [2]. The outlook implies active management may gain traction in 2026, while cyclicals’ performance hinges on economic acceleration.