Investors should not expect another strong six months for stocks after the S&P 500 finished the first half of the year up about 15%, Goldman Sachs said in a note on Friday.
Instead, the stock market is likely to consolidate sideways for the next six months as investors navigate higher interest rates. With the 10-year US Treasury yield currently at 1.43%, Goldman expects it to climb to a cycle-high of 1.9% by the end of the year.
That expected surge in interest rates will likely weigh on high growth stocks and benefit cyclical stocks, the bank said. To benefit from the market setup going into year-end, Goldman recommends investors buy stocks that have short duration, high growth investment ratios, and pricing power, according to the note.
While long duration growth stocks have outperformed their short duration value stock counterparts in recent…