Goldman Sachs cuts S&P 500 year-end target to 6,200 as economic outlook weighs on profit forecasts

A astir 10% autumn successful the S&P 500 (^GSPC) has prompted Wall Street strategists to revaluate their bullish views headed into 2025.

And precocious Tuesday night, Goldman Sachs main US equity strategist David Kostin became the archetypal large sanction connected the Street to little their year-end terms people for the S&P 500 pursuing this drop, with Kostin cutting his year-end people to 6,200 from 6,500.

"We little our 2025 year-end S&P 500 scale people to 6200 (from 6500) to bespeak a 4% simplification successful our modeled fair-value guardant P/E aggregate (20.6x from 21.5x)," Kostin and his squad wrote.

"Our caller scale people suggests an 11% terms summation during the equilibrium of the year, akin to our instrumentality estimation astatine the commencement of the twelvemonth but from a little starting point."

Earlier this week, the S&P 500 astir entered correction territory — defined arsenic a 10% driblet from its astir caller precocious — arsenic fears astir the wellness of the US system and uncertainty surrounding President Trump's tariff argumentation shook capitalist confidence.

Goldman's ain economics squad precocious revised down its 2025 GDP forecast to 1.7% from a anterior projection of 2.2% arsenic impacts from tariffs and governmental uncertainty person weighed connected the outlook.

Kostin flagged the GDP downgrade successful his enactment connected Tuesday, saying this slower maturation forecast prompted a downward revision successful its estimation for S&P 500 net maturation this twelvemonth to 7% from 9%.

"Our revised estimates bespeak the precocious reduced GDP maturation forecast of our US Economics team, a higher assumed tariff rate, and higher level of uncertainty that is typically associated with a greater equity hazard premium," Kostin wrote.

"Weaker economical enactment usually means weaker firm net growth."

Read more: What Trump's tariffs mean for the system and your wallet

Kostin noted a catalyst that improves the economical maturation outlook, either evidenced by stronger economical information oregon a reduced tariff argumentation program that could spur an upturn successful stocks. On Wednesday, possibly the archetypal motion of amended economical information emerged arsenic a softer-than-expected ostentation speechmaking sent the large banal indexes higher astatine the marketplace open.

And portion Kostin whitethorn beryllium the archetypal strategist to outright little their year-end people for the S&P, Kostin isn't the lone strategist who has precocious warned that the way guardant for US stocks apt looks antithetic than past year's forecasts.

"We person seen the US equity marketplace connected a rocky way higher done year-end, and person believed that our 6,600 tin sorb a 5-10% drawdown," RBC Capital Markets caput of US equity strategy Lori Calvasina wrote successful a enactment to clients connected Sunday.