This chart shows how stocks are now ignoring Trump's tariff threats

Goldman Sachs analysis indicates the equity market is increasingly unconcerned by recent tariff announcements, with investors expecting milder duties and shifting focus to a positive 2026 economic and earnings growth outlook. Despite earlier sharp drops, the S&P 500 recently achieved a new record high, supported by strong earnings revision breadth and the potential tailwind from dollar weakness on international sales.

Analysis

According to analysis from Goldman Sachs, the U.S. equity market is exhibiting growing indifference to tariff announcements, a stark contrast to its earlier sensitivity. The market's reaction has diminished significantly from the sharp S&P 500 declines of 5% and 3% seen in April to a largely muted response to recent tariff news in July, allowing the index to reach a new record high. This resilience is attributed to a widespread investor belief that final tariff rates will be substantially milder than initially proposed. Consequently, investor focus has pivoted towards the 2026 economic and earnings growth outlook. This forward-looking optimism is substantiated by consensus earnings revision breadth reaching its highest level since 2022 and the outperformance of cyclical industries, which suggests the market is pricing in solid GDP growth ahead. Furthermore, recent U.S. dollar weakness is identified as a tailwind, with Goldman estimating that a 10% decline in the dollar could boost S&P 500 earnings by 2-3%, given that international sales constitute 28% of index revenues.

Key Decisions for Investors

• Given the market's desensitization to trade rhetoric and its focus on a positive 2026 fundamental outlook, investors should consider maintaining a constructive stance on U.S. equities.
• The noted outperformance of cyclical industries suggests evaluating increased exposure to sectors that benefit from economic acceleration, as the market appears to be pricing in a stronger growth scenario than consensus forecasts.
• Monitor the U.S. dollar's trajectory, as continued weakness represents a tangible tailwind for S&P 500 companies with significant international revenue.
• Acknowledge that market stability is partially predicated on the assumption that tariffs will be less severe than announced; any change in this perception remains a key risk factor that could reintroduce volatility.