In This Article:
Wall Street analysts rushed to overhaul their S&P 500 price targets and U.S. growth estimates over the weekend, following one of the biggest two-day stock collapses on record, as global investors continue to reprice risk assets in the wake of President Donald Trump's new tariff regime.
The President, who doubled-down on his tariff strategy in comments to reporters late Sunday and through his Truth Social account on Monday, is preparing to apply an average levy of around 22% on all of the U.S. trading partners worldwide starting Wednesday, April 8.
China has hit back with reciprocal tariffs of 34% on U.S. goods, with Trump subsequently threatening to add another 50% duty on China if the country doesn't rescind those retaliatory levies by April 8. The European Union is expected to follow suit in some fashion over the coming days.
Analysts are convinced that the hit to global trade, and its ripple effects across various sectors of the global economy, has sharply increased recession risks and will likely pummel U.S. corporate-earnings growth over the coming quarters.
Bank of America strategists, lead by Savita Subramanian, lowered their end-of-year price target for the S&P 500 by nearly 1,000 points, to 5,600 points, in a note published Monday.
The benchmark is down more than 17.5% from its Feb. 19 peak and has fallen some 13.5% this year. That marks the third worst year-to-date slump of the new century, and compares with a 9.7% gain over the year-earlier period.
Big range of S&P 500 outcomes
"We see a wide range of outcomes from here," Subramanian and her team wrote. "A floor of 4,000 on the S&P 500 would represent about a 35% decline, slightly worse than the typical recessionary decline of 30%."
"A 7,000 target would represent a rally of 40% from here, roughly half of the post-Covid rally and roughly two-thirds of the post [Great Financial Crisis] rally off the bear market lows," she added.
JP Morgan's head of global market strategy, Dubravko Lakos-Bujas, laid out the bank's range of S&P 500 outcomes in a note published Monday, with a bear case target of 4,000 and a bull case target of 4,800.
The bank's base case, however, pegs the benchmark at 5,200 points by the end of the year, a modest 2.5% gain from current levels, based on "partial tariff relief" and a 2026 S&P 500 earnings forecast of $280 per share.
Related: Trump tariffs raise U.S. recession and stagflation risks
John Stoltzfus at Oppenheimer cut the firm's 2025 S&P 500 earnings forecast by $10 to $265 per share, compared with the LSEG consensus estimate of $269 per share, as a result of the tariff hit.