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Wall Street banks have slashed their targets for the main US share gauge over the past fortnight, as fears grow over the potential economic fallout from President Donald Trump’s trade war.
At least 10 banks, including JPMorgan, Bank of America and Evercore ISI, have cut their estimates for the S&P 500 index in the weeks since Trump’s decision to impose a baseline duty of 10 per cent on most US imports and higher “reciprocal tariffs” sent shockwaves through financial markets.
The S&P 500 has fallen more than 7 per cent in highly volatile trading since the initial levies were announced on April 2, and by 14 per cent since touching a record high on February 19. Trump has since paused the reciprocal tariffs and created a carve-out for smartphones and some other electronics.
But economists say that the uncertainty caused by rapid U-turns in trade policy could still slow economic growth, or even trigger a recession — something that would hit the earnings of listed US companies.
“The goldilocks sentiment in place entering this year has given way to abject uncertainty,” said Citigroup analyst Scott Chronert in a note.
Wall Street’s average end of year S&P target now stands at 6,012 — compared with 6,539 at the end of last year. The S&P 500 finished this week at 5,283.
The new forecasts mean that, despite growing worries about slowing economic growth, strategists nevertheless expect the index to rise 14 per cent over the coming months. It would mark a gain of just 2 per cent for 2025, a major slowdown from the back-to-back rallies of more than 20 per cent in 2023 and 2024.
The Banks’ newly cautious tone marks a humbling reversal since the start of the year, when many market participants had expected lower taxes and lighter regulation under a Republican administration to boost corporate profits.
Citigroup on Friday said it expects the S&P 500 to end the year at 5,800, down from a previous call of 6,500. The bank also lowered its 2025 earnings per share estimate to $255 from $270, just below the average forecast of $262, Bloomberg data shows.
Chronert said that the recent sharp fall for US equities may become “the first bear market specifically triggered by US presidential actions”.
JPMorgan lowered its “base case” target on April 7 to 5,200 from 6,500, assuming “partial” relief on tariffs. “Even though we do not believe US Exceptionalism is over,” the bank wrote at the time, “this [liberation day] shock came at a time when valuation was rich, positioning was crowded and leadership was particularly narrow.”
Peter Berezin at BCA Research, who has the lowest 2025 price target for the S&P 500 among analysts surveyed by Bloomberg, said in mid-February that he expects the index to close out this year at about 4,450, implying a drop of 15 per cent from current levels. In early March he said a US recession was likely to begin within the next three months.
“There’s a lot of groupthink on Wall Street,” said Berezin.
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