Raymond James sticks with 5,800 S&P 500 target
Raymond James cut its S&P 500 (SP500) earnings-per-share estimate for 2025 from $270 to $250$255, citing softer economic activity and muted corporate spending, yet left its year-end index target of 5,800 intact, based on a steady GDP growth outlook.
The firms' Chief Investment Officer, Larry Adam, points to a landmark U.S.-China deal that slashes American tariffs on Chinese imports from 145% to 30% and Chinese duties on U.S. goods from 125% to 10% for 90 days, reopening supply lines and easing fears of acute shortages. Markets cheered the tariff reprieve: the S&P 500 rallied roughly 3% off its recent lows after the announcement.
Despite the tariff truce's relief, Adam cautions that equity valuations are already stretched, leaving limited runway for multiple expansion without a stronger earnings backdrop. He calls the outlook cautious optimism, noting that while downside risks have receded, upside drivers remain scarce absent an unexpected boost to corporate profits.
Why it matters: A lower EPS range underscores the tug-of-war between policy catalysts and real-world economic headwinds, forcing investors to temper return expectations even as trade tensions ebb.
Investors will focus on Q2 earnings and Fed commentary for clues on whether this tariff window can sustain growth and revive profit momentum.
This article first appeared on GuruFocus.
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