Wall Street's leading prognosticators are cutting their 2025 outlooks for the S&P 500 Index at a faster pace than at the start of the pandemic, though many still expect equities to finish the year higher.
Worries over how US tariff policy will impact economic growth and corporate profits have pushed strategists to slash their average year-end target for the US equities benchmark to 6,047 from 6,539 — a decline of 7.5%, according to a survey by Bloomberg. By comparison, they cut year-end views by 5% between the S&P 500's high in February 2020 and March 2020, when stocks were whipsawed by record volatility tied to the Covid-19 pandemic.
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For now, however, the strategists' average target is still nearly 14% higher than where the index stood on Thursday afternoon. Barring another round of revisions lower, it would leave the S&P 500 with a 2.8% gain for the year — a comparatively bullish outlook for a gauge that was flirting with a bear market earlier this month.
“There's tremendous uncertainty on how the global trade war will ultimately hurt the economy, so the odds are stacked against sell-side strategists who are betting on hefty stock gains from here,” said John Cunnison, chief investment officer at Baker Boyer Bank.
Firms like Goldman Sachs Group Inc., Societe Generale SA, RBC Capital Markets, Yardeni Research and others have been humbled this year, with many proven wrong about the degree of damage President Donald Trump's trade policies would do to the stock market.
Out of the 21 strategists polled, 13 have cut their targets. JPMorgan Chase & Co.'s Dubravko Lakos-Bujas lowered his outlook the most — by 20% — and is now the most bearish on the index among the respondents with a target of 5,200. Teams at Evercore ISI, Oppenheimer & Co., Bank of America and Ned Davis Research reduced their estimates by over 15%.
Wells Fargo & Co.'s Chris Harvey — who has the highest target on Wall Street — still sees the S&P 500 finishing the year at 7,007, implying a 32% advance through Wednesday's close. And Deutsche Bank's Binky Chadha likewise projects the index will finish 2025 at 7,000.
“Trade policy is already affecting the psyche of consumers and earnings growth, leaving the chances of a 15%, 20% even 30% rally from here by year-end very unlikely,” Cunnison said.
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