In recent weeks, Wall Street banks have reduced their projections for the primary U.S. stock market index, amid rising concerns regarding the economic repercussions of former President Donald Trump’s trade conflicts. A minimum of ten banks, among them JPMorgan, Bank of America, and Evercore ISI, have lowered their forecasts for the S&P 500 index following Trump’s decision to implement a baseline tariff of 10% on most U.S. imports. This move, along with higher “reciprocal tariffs,” has caused significant disruptions in financial markets.
Since the imposition of the initial tariffs on April 2, the S&P 500 has experienced a decline of more than 7% within a highly volatile trading environment. The index has decreased by 14% since attaining a record high on February 19. Although Trump has subsequently suspended the reciprocal tariffs and provided exemptions for smartphones and certain other electronics, economists remain concerned that the unpredictability resulting from rapid changes in trade policy could decelerate economic growth or even lead to a recession, which could adversely affect the profits of U.S. publicly traded companies.
Citigroup analyst Scott Chronert remarked that the prevailing optimistic sentiment at the beginning of the year has shifted to considerable uncertainty. Wall Street’s average year-end target for the S&P now stands at 6,012, in contrast to 6,539 at the end of the previous year. Currently, the S&P 500 closed the week at 5,283. Despite intensifying worries about slowing economic growth, strategists still anticipate a 14% increase in the index over the coming months. This expected rise signifies a modest 2% gain for 2025, representing a significant slowdown from the consecutive rallies exceeding 20% in 2023 and 2024.
The revised cautious stance from the banks signifies a notable reversal from earlier in the year when many market analysts predicted that reduced taxes and lower regulation under a Republican administration would enhance corporate earnings. On Friday, Citigroup forecasted the S&P 500 to conclude the year at 5,800, down from a previous target of 6,500, and adjusted its 2025 earnings per share estimate to $255 from $270, slightly below the average forecast of $262, according to Bloomberg data.
Citigroup’s Chronert also highlighted that the recent sharp decline in U.S. equities could possibly become the first bear market initiated directly by U.S. presidential actions.
JPMorgan revised its “base case” target on April 7, lowering it to 5,200 from 6,500, anticipating “partial” tariff relief. The bank stated in their communication that, despite U.S. exceptionalism not being considered over, recent disruptions occurred when market valuations were high, positioning was crowded, and leadership within market sectors was particularly narrow.
Peter Berezin of BCA Research, who has the most conservative 2025 price target for the S&P 500 among analysts surveyed by Bloomberg, indicated in mid-February that he expects the index to close the year at approximately 4,450, signaling a 15% decrease from current levels. In early March, Berezin expressed that a U.S. recession was likely to commence within the subsequent three months, noting a prevalent “groupthink” mentality on Wall Street.
