Goldman Sachs Group Inc. has become a little more optimistic on earnings prospects for the S&P 500 Index this year but stressed that management commentary from companies is going to be important to gauging the outlook.

Goldman’s baseline forecast for S&P 500 earnings per share in 2020 is $115, up from a prior estimate of $110. The firm maintained its outlook for 2021 at $170 -- 4% above 2019’s realized level -- and made a prediction of $188 for 2022.

“Given the heightened investor focus on the earnings outlook in 2021 and 2022, we expect management commentary will prove more valuable than backward-looking results,” strategists led by David Kostin wrote in a note July 10, ahead of the start of the second-quarter reporting season.

Equities globally are trading at close to the highest levels since February, putting the focus on whether the profit outlook will back up bullishness fueled by central bank and fiscal policy support. In the U.S., a swathe of companies have yet to provide concrete guidance on the impact of the pandemic.

Investors are likely to look “below the surface of aggregate results to better understand the earnings impact of shutdowns and how quickly earnings can recover as the world reopens,” Goldman also wrote.

Overall second-quarter results are likely to mask a wide dispersion by sector, according to Goldman. The strategists expect losses in energy and consumer discretionary shares, and a weak quarter from financials. They see more robust performance from utilities and technology companies.

The firm said its projections for S&P 500 profits are below consensus for 2020, but above for 2021 and 2022. Regulation, infrastructure and trade policy are among the risks for the forecasts, the strategists said.

Goldman reiterated the U.S. election in November is likely to create additional uncertainty for earnings, after saying some weeks ago that tax proposals that might be enacted under Democratic presidential candidate Joe Biden could sink 2021 earnings per share to $150 from the current estimate of $170.

In the latest note, the strategists said large fiscal expansion could provide a tailwind to earnings and pointed to Biden’s proposals along those lines. Goldman has also suggested hedging for a potential delay in election results.

This article was provided by Bloomberg News.