Despite recent stock market declines and rising interest rates , Goldman Sachs ( NYSE:GS ) strategists believe S&P 500 earnings will remain resilient. The recent performance of U.S. equities has generally been consistent with the change in yields, but expect earnings growth, not valuations, to drive equity returns in the coming months, said Goldman Sachs strategist David Kostin in a Jan. 17 report.

From early December through last week, the S&P 500 fell about 3%, while the 10-year Treasury yield climbed 64 basis points to 4.8%. However, Goldman Sachs projects yields will decline to 4.4% by year-end, allowing the Federal Reserve more flexibility to cut rates. Goldman's historical analysis suggests higher yields would only impact S&P 500 earnings if they significantly slow economic growth.

While persistently high rates could pressure valuation multiples, the direct impact on earnings per share (EPS) remains minimal. As of Jan. 17, the SPDR S&P 500 ETF ( SPY ) closed at $597.58, gaining 1.00% (+5.94). After-hours trading saw a slight uptick to $597.69 (+0.02%), reflecting steady market sentiment amid rate uncertainty.

This article first appeared on GuruFocus .

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