Wall Street strategists raise outlooks for US stocks as China tariff pause eases growth fears

Tue, May 13, 2025, 8:46 AM 3 min read

Wall Street strategists are erstwhile again increasing much bullish connected the outlook for the S&P 500 (^GSPC) this twelvemonth arsenic a 90-day truce betwixt the US and China connected tariffs has sparked a marketplace rally.

On Monday night, Goldman Sachs raised its year-end people for the S&P 500 to 6,100 from a anterior forecast of 5,900. Meanwhile, Yardeni Research boosted its year-end projection to 6,500, up from a erstwhile telephone for 6,000. Yardeni's much bullish people of 6,500 reflects a astir 11% further summation from existent levels for the benchmark index. Both firms mentioned diminishing fears of a large maturation slowdown arsenic a cardinal crushed stocks volition proceed to determination higher.

"We rise our S&P 500 instrumentality and net forecasts to incorporated little tariff rates, amended economical growth, and little recession hazard than we antecedently expected," Goldman Sachs main US equity strategist David Kostin wrote successful a enactment to clients.

"Among our main concerns astir Trump's Tariff Turmoil was that the driblet successful banal prices would person a important antagonistic wealthiness effect connected consumers," Yardeni Research president Ed Yardeni wrote. "After [Monday's] banal marketplace rally, the antagonistic wealthiness effect is astir apt insignificant."

The forecast raises travel aft the US and China announced a 90-day tariff hold connected Monday. The scaling backmost of the commercialized warfare brought economists' estimated effectual US tariff complaint down from astir 24% to 14%. More importantly, the intermission has galore connected Wall Street feeling similar a recession is present acold little apt successful 2025. This marks a cardinal reversal from the anterior 2 months, wherever 11 strategy teams, including Goldman Sachs and Yardeni Research, had lowered their S&P 500 targets arsenic concerns implicit an economical maturation slowdown escalated.

But aft the latest tariff delay, Goldman's economics squad moved down its recession probability for the adjacent 12 months to 35% from a anterior forecast of 45% portion boosting its GDP forecast to 1% maturation for the year, higher than a anterior forecast of 0.5%. Yardeni present sees 2025 GDP successful a scope of 1.5% to 2.5%, up from a anterior projection successful the 0.5% to 1.5% range.

Kostin astatine Goldman points retired that accrued GDP projections pb to a higher net forecast successful its S&P 500 people model. He highlighted that a 100 ground constituent summation successful GDP counts for astir 3 oregon 4 percent points of S&P 500 net growth.

"Our updated just worth estimation reflects reduced uncertainty, faster net growth, little inflation, and renewed assurance successful the fundamentals for the largest stocks successful the index," Kostin wrote. "However, already-optimistic marketplace pricing of the economical maturation outlook arsenic good arsenic uncertainty surrounding the magnitude of impending slowdown successful economical and net maturation volition apt support a ceiling connected equity multiples during the adjacent fewer months."