For two consecutive years, stock-market prognosticators lifted their outlooks for the S&P 500 Index over and over again to keep up with an unrelenting rally.
Now just under three months into the year, sell-side strategists at firms including JPMorgan Chase & Co. and RBC Capital Markets are starting to temper bullish calls for 2025 as President Donald Trump’s tariffs stoke fears of slowing economic growth and send US equities into a tailspin.
While none of the soothsayers have pulled the trigger just yet, the rearrangement — which comes less than three weeks after the S&P 500 hit a record — is showcasing a rising sense of uncertainty among Wall Street forecasters. Historically, strategists’ consensus target has typically lagged the actual market’s moves by about 60 days, according to an analysis from Piper Sandler & Co.
“It will remain difficult to fully handicap the potential policy downsides given lack of clarity on timing, scope, and depth of changes,” JPMorgan strategist Dubravko Lakos-Bujas wrote in a note to clients. “In the interim, investors should embrace volatility.”
His team warned on Thursday that their year-end forecast for the S&P 500 of 6,500 — a roughly 13% gain from Friday’s close — may not materialize before December, citing a “large standard error” around the figure against heightened uncertainty.
“I don’t think anybody has more conviction today at all: more uncertainty, yes — a wider band of outcomes, yes,” Michael Kantrowitz, Piper Sandler’s chief investment strategist, said.
Indeed, Lakos-Bujas indicated the S&P 500 could swing anywhere from his original year-end projection to as low as 5,200 throughout 2025.
The cautious tone marks a reversal from earlier this year when he and peers across major banks called for solid stock gains in the months ahead as deregulation, tax cuts, and other Trump policies perceived as “pro-growth” were set to propel the market. Instead, levies on goods from trading partners such as Canada, Mexico and China have forecasters simmering down their optimism.
Separately, the bank’s trading desk flipped to a tactically bearish stance, saying expectations for gross domestic product are poised to crater, earnings revisions will move lower, and most notably, Wall Street will have to revisit year-end forecasts for the S&P 500.
Traders have faced a bruising stretch for US stocks, with the benchmark dropping five of the seven weeks since Trump’s arrival at the White House, while the Nasdaq 100 Stock Index tumbled into a correction on Friday.
At RBC Capital Markets, Lori Calvasina lowered her bear case for the S&P 500 to 5,600 from 5,775 by year-end based on new stress-test modeling that now reflects flat corporate earnings and a different inflation and interest rate scenario.
“Strong post-election vibes were an important part of the bullish consensus on 2025 for US equities, which has come under pressure,” Calvasina said in a note to clients. She also asserted that the risk of a “growth scare” in the S&P 500, defined as a 14% to 20% drawdown, has risen.
Still, strategists including Calvasina are sticking to their S&P 500 price targets for the year for now as the economy remains solid based on the latest employment data and remarks by Federal Reserve Chair Jerome Powell, who said Friday that the central bank does not need to rush to adjust monetary policy. On average, Wall Street expects the S&P 500 to close 2025 just above 6,500, based on a survey of estimates compiled by Bloomberg.
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