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 around the world starting Wednesday.
China has hit back with reciprocal tariffs of 34% on U.S. goods, with the European Union 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, taking it to 5,600 points, in a note published Monday.
The S&P 500 is down 13.5% so far this year, the third largest year-to-date decline of the new century and a massive swing from last year’s 9.7% gain over the same period.
The benchmark is down more than 17.5% from its February 19 peak, and has fallen some 13.5% since the start of the year. That marks the third worst year-to-date slump of the new century, and compares to a 9.7% gain over the same period last year.
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 GFC rally off the bear market lows,” she added.
JPMorgan’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 to the LSEG consensus estimate of $269 per share as a result of the tariff hit.
However, Stoltzfus only cut his end-of-year S&P 500 target to 5,950 points, a solid 17.3% gain from current levels, and argued that “the equity market appears oversold in our view with uncertainty at levels investors find hard to embrace.”
In the more immediate term, Richard Saperstein, chief investment officer at New York based Treasury Partners, thinks stocks are unlikely to rebound from their recent collapse until the tariff situation is ultimately resolved.
“The swift and sudden stock market decline is a repricing to reflect an impending recession from the burden of tariffs,” he said. “The uncertainty of trading partner retaliation is still weighing on the markets and the elevated multiples we saw back in February are correcting to reflect a slower growth environment.”
Recession risks surge
On the growth side, Goldman economists, lead by Jan Hatzius, raised their recession risk odds to 45% from 35% following what the team described as “a sharp tightening in financial conditions, foreign consumer boycotts and a continued spike in policy uncertainty that is likely to depress capital spending by more than we had previously assumed.
“This baseline forecast still rests on our standing assumption that the effective U.S. tariff rate will rise by 15 percentage points in total, which would now require a large reduction in the tariffs scheduled to take effect on April 9,” Hatzius added.
Goldman trimmed its fourth quarter growth forecast to around 0.5%, and sees the Federal Reserve cutting rates at least three times, starting in June, in order to offset the rising growth risks.
Should the economy slide into recession, Goldman sees a full 200 basis points in Fed rate cuts over the next twelve months.
Related: Don’t expect the Fed to rescue stocks from tariff gambit
Bill Adams, however, chief economist at Comerica Bank in Dallas, argues that Fed Chair Jerome Powell indicated last week that “the bar for the Fed to cut interest rates in response to a tariff-driven market selloff is considerably higher than the bar to respond to a normal economic shock.”
“The Fed isn’t rushing in to cushion the blow of tariffs to the stock market or the broader economy,” Adams said of Powell’s speech to an event in Virginia last week. “Powell said the Fed is ‘well positioned to wait for greater clarity before considering any adjustments to our policy stance’.”
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