MW Wall Street begins to cut S&P 500 targets as tariff worries rock the stock market. Should investors be concerned?

By Isabel Wang

Wall Street is beginning to rethink its price targets - but consensus usually lags stocks by around three months, Piper Sandler says

Only a few months into 2025, the sharp decline of the U.S. stock market has prompted some of Wall Street's top forecasters to scale back their bullish predictions for the S&P 500.

In the past week alone, at least two major Wall Street firms revised their year-end targets for the S&P 500 SPX, as rising uncertainty around President Donald Trump's ever-changing tariff plans - and retaliatory moves by trading partners - stoked fears of an escalating global trade war and sent shockwaves through financial markets.

Goldman Sachs strategists on Wednesday lowered their year-end projection for the large-cap benchmark index to 6,200, from 6,500 previously. The investment bank's economics team also recently cut its 2025 U.S. GDP forecast as the impacts of tariffs and political uncertainty weigh on the outlook for the world's largest economy.

One day later, Yardeni Research - one of Wall Street's most prominent bulls - also sounded the alarm, dialing back its "best case" S&P 500 target to 6,400 from 7,000, citing the potential stagflationary impact of Trump's second presidency.

The revised estimates put Wall Street's average year-end target for the S&P 500 at 6,607, implying an advance of more than 17% from Friday's close of 5,638.94, according to a recent survey of Wall Street's investment banks and research firms by MarketWatch (see table below). Heading into 2025, the average target was around 6,667.

   Wall Street firm                  2025 S&P 500 target as of December  2025 S&P 500 target as of Mar. 14 
   Oppenheimer Asset Management      7,100                               7,100 
   Deutsche Bank                     7,000                               7,000 
   Société Générale                  6,750                               6,750 
   BMO Capital Markets               6,700                               6,700 
   Bank of America                   6,666                               6,666 
   Wells Fargo Investment Institute  6,600                               6,600 
   Barclays                          6,600                               6,600 
   RBC Capital Markets               6,600                               6,600 
   CFRA Research                     6,585                               6,585 
   Citi                              6,500                               6,500 
   J.P. Morgan                       6,500                               6,500 
   Morgan Stanley                    6,500                               6,500 
   UBS                               6,400                               6,400 
   Yardeni Research                  7,000                               6,400 
   Goldman Sachs                     6,500                               6,200 
   Median                            6,600                               6,600 
   Average                           6,667                               6,607 
   Source: MarketWatch 

The cautious tone on Wall Street marks a big departure from the end of last year, when strategists largely anticipated U.S. stocks would continue their swift climb in 2025 after two robust and forecast-defying years.

The S&P 500 as of Friday was down 4.2% so far in 2025, while the Dow Jones Industrial Average DJIA was 2.5% lower and the Nasdaq Composite COMP was off 8.1%, according to FactSet data.

Wall Street was counting on the Trump administration's "pro-growth" playbook to strengthen the economy and American corporations by providing tax cuts and looser financial regulations. But so far, little has emerged in terms of concrete policies on those fronts, while the focus remains largely on tariffs, immigration curbs and a smaller federal government.

Other banks and research firms, while not in a rush to adjust their official year-end projections for the S&P 500, have also started to adopt a less bullish approach in their forecasts.

RBC Capital Markets' Lori Calvasina on Tuesday said she's sticking with an S&P 500 target of 6,600 for 2025, but sees rising potential for a 14% to 20% stock drawdown that "would likely flip us into our year-end 2025 bear case of 5,775," she said in a client note shared with MarketWatch.

Still, there's not yet "sufficient evidence to pivot to it," Calvasina added. "We remain in discovery mode, and think the U.S. equity market is at a critical juncture."

Meanwhile, J.P. Morgan's team of strategists, led by Dubravko Lakos-Bujas, has maintained their year-end price target of 6,500 - but acknowledged that "there is a large standard error around this forecast and the possibility that S&P 500 may not reach this level until 2026," they recently wrote. Citigroup also joined the cautious camp earlier this week, downgrading U.S. equities to neutral from the overweight, or bullish, stance it had held since October 2023.

See: Why the worst of this stock-market correction may be over

To be sure, bearishness among individual investors about the short-term outlook for stocks continued to climb over the past week - a contrarian sign that may suggest the selloff has already hit bottom. Now, investors will want to weigh if the shift in sentiment among some of Wall Street's most prominent bulls and bears matters.

Wall Street's consensus S&P 500 target usually lags stocks by around three months, or 60 trading days, Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler, told MarketWatch on Friday.

"It does seem like Wall Street's major forecasters are always behind the curve, especially when the market is going up and down rapidly," said Greg Halter, director of research at Carnegie Investment Counsel. "We've had a correction for the S&P 500, so I don't think [strategists] want to be hanging out too far away from current levels, unless they're really trying to make a statement that they're very bullish or bearish on the market."

One of the most common methods Wall Street strategists use to calculate their S&P 500 targets is to multiply the estimated earnings per share (EPS) for the large-cap index over the next 12 months by its forward price-to-earnings (P/E) ratio.

But while the estimated EPS numbers are "generally pretty close to reality," the forward P/E ratio varies a lot and could make a big difference in the price target for the S&P 500, Halter told MarketWatch via phone on Friday. So much is based on the "subjectivity of that forward P/E ratio that strategists are using, which is a huge judgmental factor and can be squishy," he said.

Expectations for corporate earnings haven't really changed so far in 2025. Wall Street now sees the S&P 500's full-year EPS at $271.05, from $274.19 in early January, according to FactSet data. The forward 12-month P/E ratio for the large-cap index was 19.9 as of Friday afternoon, down from 21.6 on Jan. 10, according to FactSet.

See: Why this Wall Street strategist says investors should stick with U.S. stocks despite recession fears

U.S. stocks finished higher on Friday as Wall Street clawed back some of its losses in a volatile week of trading. The Dow Jones Industrial Average gained over 670 points, or 1.7%, on Friday, while the Nasdaq soared 2.6% and the S&P 500 popped 2.1%, according to FactSet data. But the Dow booked a second straight week of losses, while the S&P 500 and Nasdaq were both down for the fourth straight week.

-Isabel Wang

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March 15, 2025 07:00 ET (11:00 GMT)

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