Key insights
- Goldman Sachs highlights potential earnings risks for financials due to rising oil prices and supply chain concerns. While near-term net income growth may be positive due to strong loan growth and reduced Fed rate cut expectations, de-risking by hedge funds could negatively impact capital markets activity later in the year. Overall, the impact on US equities is slightly negative due to inflationary pressures and potential headwinds for the financial sector.
Investing.com - U.S. stocks fell Tuesday as investors awaited developments in the Middle East and positioned ahead of first-quarter 2026 earnings season, which begins Wednesday with results from Delta Air Lines (NYSE:DAL).
The Strait of Hormuz remains largely closed to oil tankers, significantly curbing global oil availability and raising concerns about supply chain shortages in coming months, according to Goldman Sachs. WTI oil prices have spiked, prompting investors to consider implications for inflation and U.S. growth.
Goldman Sachs analyst Richard Ramsden sees room for banks to increase net income growth in first-quarter results as markets price out Federal Reserve rate cuts and loan growth remains strong. The firm recommends buying Bank of America (NYSE:BAC), Citigroup (NYSE:C), and Wells Fargo (NYSE:WFC). Hedge funds are de-risking, which could negatively impact capital markets activity for select banks later this year.
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