Wall Street’s been marching its way back into bullish territory, but one firm just hit the gas.
Analysts at Oppenheimer just dropped the loudest S&P 500 target on Wall Street, and traders are doing double-takes.
With President Donald Trump cutting billion-dollar deals left and right, Mr. Market is taking full notice, but Oppenheimer thinks we’re just getting started.
The question now: Are they ahead of the curve or tempting fate?
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President Trump’s recent trade streak has everyone buzzing, but it seems Oppenheimer’s seeing something others aren’t at this point.
Oppenheimer lifts its year-end S&P 500 forecast to 7,100 as trade breakthroughs with Japan and the EU boost market sentiment.
Image source: Michael M. Santiago/Getty Images
President Trump’s trade blitz fuels S&P 500 rebound, but Beijing wild card remains
President Trump’s shift from tariff escalation to trade diplomacy has effectively flipped the script on U.S. stocks.
In just a couple of weeks’ time, the White House locked down $1.9 trillion in cross-border agreements.
That includes a massive $550 billion deal with Japan and a $1.35 trillion framework with the European Union.
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Drilling into the specifics of the EU agreement, it includes $750 billion in American energy exports and $600 billion in inbound investment pledges.
Consequently, the S&P 500 has now climbed 28.2% since its April 8 low of 4,981, particularly on the back of the rallying heavy-hitting cyclical sectors.
Industrial bellwethers like Caterpillar, GE Aerospace, semiconductor giants such as Nvidia and Texas Instruments, and telco players like Verizon are looking to take things up a notch.
Trump’s 15% levy on most European goods looks steep, but it has been paired with long-term clarity on trade flows and market access.
Still, China remains a strategic adversary.
Export controls on AI chips and upcoming legislation on outbound investments continue to weigh down the U.S.-China outlook.
Beijing, while quiet, has the potential to retaliate with rare earths, cybersecurity mandates, or sluggishness in approving U.S. firms working in China.
Though investors are leaning into the Trump trade rally, the geopolitical backdrop remains volatile.
Oppenheimer resets S&P 500 target to 7,100 after President Trump’s trade blitz
Oppenheimer’s S&P 500 forecast has leapfrogged every major Wall Street firm, putting out the boldest S&P 500 call at 7,100 by year-end.
The move follows two headline-grabbing trade deals led by the Trump administration.
That’s a massive turnaround from April, when President Trump’s “Liberation Day” tariffs led to a steep S&P 500 selloff. Since then, the index has been rallying, with cyclical stocks leading the charge.
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Now, Oppenheimer’s chief investment strategist, John Stoltzfus, says the path is clearing.
“With the announcement of trade deals (Japan, EU) by President Trump…we believe that enough ‘tariff hurdles’ have been overcome for now,” Stoltzfus wrote.
He’s not alone, though.
Morgan Stanley, Goldman Sachs, Bank of America, and RBC have all recently raised their targets, but none have gone as far as Oppenheimer.
Oppenheimer also reinstated its previous $275 S&P earnings forecast, a signal that it sees healthier corporate profit growth ahead, especially if the Fed holds rates steady this week.
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Whether this proves pertinent or premature is still up in the air, but with tariffs turning from headwind to tailwind, Oppenheimer isn’t playing it safe.
Q2 earnings season delivers biggest upside beat since 2023
It’s important to note that strong earnings are doing the heavy lifting at this point.
As of late July, the blended year-over-year earnings growth rate for the S&P 500 is at a cool 6.4%, according to FactSet.
That’s a healthy bump from the 4.9% forecast on June 30, which makes it the biggest upgrade mid-season in over two years and the eighth consecutive quarter of bottom-line gains.
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So far, 80% of reporting companies have gone past consensus estimates, beating both five-year (77%) and 10-year (73%) averages.
It’s the best beat rate since Q3 2023, and it’s not just the tech space that’s seeing such numbers.
Seven sectors have seen such upward revisions, led by communication services and industrials.
That revision wave has a real impact.
Bank of America estimates that every 1-point EPS upgrade translates into a 0.8% lift in the S&P 500.
Still, the rally now faces a test.
With input costs sticky and macro headwinds in view, Q3 guidance needs to carry this momentum, or valuations could wobble in the process.
