Here are the latest market insights from the Goldman Sachs Wealth Management Investment Strategy Group (ISG).
Geopolitical tensions eased somewhat in May, as the US and Iran continued talks to reopen the Strait of Hormuz. Despite continued disruption to global oil flows, oil prices declined over the month, supported by the ceasefire, inventory buffers, some demand destruction, rising US energy exports, and weaker demand from China.
Here’s a recap of what happened in the market and economy.
Global equities performed well in May, supported by strong earnings and AI investment. Emerging market equities outperformed, with earnings rising 35%, largely driven by the information technology sector, helping the MSCI EM return 9.7% over the month.
In the US, first-quarter earnings rose 28.7%. While part of the increase reflected non-operating gains, underlying earnings growth remained strong, helping the S&P 500 return 5.3% in May.
Elsewhere, the dollar edged higher in May, supported by resilient US growth, partly linked with AI and favorable terms-of-trade dynamics. These developments also pushed US rates up, especially at the front end of the curve, as some monetary tightening was priced in amid strong growth and inflation.
In the US, high-frequency indicators continue to point to solid growth in the second quarter, especially in the manufacturing sector, which is benefiting from the build-up of AI infrastructure. In May, the labor market showed further signs of stabilization, with nonfarm payrolls rising by 172,000, above consensus estimates.
Despite stronger job growth, wage pressures still appear limited, while leading indicators remain consistent with stable upcoming wage growth. In April, both CPI and PCE surprised to the upside again.
This strength was driven by services inflation, particularly transportation, and by shelter inflation, owing to measurement issues related to the government shutdown.
ISG expects inflation to peak in May and to gradually decelerate in the following months, given that:
Nevertheless, ISG acknowledges two upside risks to their forecast:
ISG continues to expect the Fed to remain on hold until cutting rates in December and once more in 2027. Risks to ISG’s forecast are tilted toward later or fewer cuts.
In the latest Market Spotlight video, Goldman Sachs Ayco’s Immanuel Tan addresses the:
Forecasts refer to full-year average growth rates. Forecasts as of June 3, 2026. Sources: Investment Strategy Group, Goldman Sachs Global Investment Research, Haver, Bloomberg.
Expectations and forecasts are based on material assumptions which are subject to change and provide no guarantee of results. Past performance is not indicative of future results, which may vary.
Expected returns are estimates of hypothetical average returns of asset classes derived from statistical models. There can be no assurance that these returns can be achieved. Actual returns are likely to vary. These models are not a reliable indicator of future performance.
This material represents the views of the Investment Strategy Group (ISG) in Goldman Sachs Asset & Wealth Management (AWM) and is not a product of Goldman Sachs Global Investment Research (GIR). It is not research and is not intended as such. The views and opinions expressed by ISG may differ from those expressed by GIR, LP, or other departments or businesses of Goldman Sachs. Forecasts are estimated, based on assumptions, and subject to revision and may change as economic and market conditions change.
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