Animal spirits are trumping concerns about tariffs on Wall Street, analysts at Goldman Sachs (GS) said in earnings season update published on Monday as the stock market shut to mark the Presidents’ Day holiday.
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With 77% of the S&P 500 now reported, they note “healthy revenue growth” among businesses listed on the broad index and a strong US consumer reaffirm that economic activity increased at a solid pace.
According to GS, real revenues excluding the volatile energy sector rose at a solid 3.2% year-over-year pace. Company commentary generally indicated that consumer spending remained resilient, and GS’s quantitative measure of sentiment around the consumer on earnings calls improved to its highest level in three years.
Tariffs Drag on Capex
Tariffs are seen a drag on capex expectations and a boost to inflation expectations. “Management references to tariffs jumped well above levels seen during the last trade war,” noted the GS team led by Jan Hatzius.
While analyst capex expectations for 2025 were revised up by 5% over the last quarter they were only revised up by 2% for companies with broad exposure to tariffs and were revised down by 1% for companies with exposure to foreign retaliation.
For example, automaker General Motors (GM) and industrial supplies company WW Grainger (GWW) were among companies signalling tariffs could see them delay capex spending. Companies with greater tariff exposure also raised their inflation expectations “disproportionately,” said GS, citing GWW, multinational healthcare business Cardinal Health (CAH) and glass and ceramics maker Corning (GLW) among others.
Deregulation and AI Trends
Other trends in earnings calls highlighted by the bank include deregulation and AI.
On deregulation , they noted that there might not be as much of a near-term tailwind as expected under the Trump administration, and investors are noticing.
“Management teams generally do not expect a near-term boost to activity from deregulatory efforts, and analysis by our equity strategists similarly suggests that the investor enthusiasm about a near-term boost to energy companies and banks has waned,” the bank’s analysts wrote.
However, GS argues that broader sentiment about the economic environment has improved amongst businesses and there has been signs of a pick-up in the leading indicators of business investment. They noted that fellow Wall Street bank Wells Fargo (WFC) and stock exchange owner Nasdaq (NDAQ) were among companies to see positive deregulatory trends.
AI has caught the headlines but GS says there is “limited near-term macro risk in either direction” from the technology.
During a tempestuous January for the stock market DeepSeek became a household name, pushing the frequency of AI-related discussions to a new high, the analysts said.
“While more efficient model training and declining compute costs could potentially lower AI-related capex, we see limited near-term implications,” they wrote.
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