LIVE MARKETS-Households to dominate demand for US stocks next year: Goldman Sachs

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HOUSEHOLDS TO DOMINATE DEMAND FOR US STOCKS NEXT YEAR: GOLDMAN SACHS

Demand for U.S. stocks stemming from households is expected to represent the largest source of equity demand next year, Goldman Sachs analysts said in a note, with corporates expected to stand in second place.

In a note by Goldman chief U.S. equity strategist David Kostin and his team, the Wall Street brokerage estimates that households directly own 40% of the U.S. equity market and nearly 90% of the equity assets belong to the wealthiest 10% of households.

For the year ahead, Goldman Sachs expects households to hold their dominant position and represent the largest source of equity demand, accounting for $520 billion of net U.S. stock purchases as household wealth, consumer confidence, and cash yields point to continued demand in 2026.

The Wall Street brokerage expects corporate net equity demand to be the second highest behind households in 2026, with estimates standing at $410 billion of demand.

Corporate net equity demand is a function of share buybacks, cash M&A, and equity issuance. Solid earnings growth, Fed rate cuts, and declining policy uncertainty should help boost buybacks in 2026.

Mutual funds and pension funds are estimated to be net sellers of U.S. stocks next year, with the brokerage expecting the trend of pension selling to continue next year as funds rotate away from equities and toward fixed income in order to neutralize their future liabilities.

Despite debates around U.S. exceptionalism, foreign investors have been the largest source of equity demand so far in 2025, and are expected to continue buying next year totalling $250 billion.

"Demand for US equities from foreign investors has been historically greatest when US equities underperform global equities and after periods of USD weakness, and this pattern has continued this year," Goldman Sachs says.

(Shashwat Chauhan)

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