S&P 500 Could Tank 37% to 3,700 in Mild Recession, Wolfe Research Warns
April 25 - The S&P 500 Index may fall to roughly 3,700 points, a drop of about 37% from January, if tariff uncertainty sparks even a mild recession, Wolfe Research strategist Chris Senyek said in a recent note.
He forecasts index earnings per share to decline at least 15% from around $266 to near $225, echoing the median 16.7% EPS slide seen in the last four recessions. Senyek also sees price-to-earnings multiples contracting from the current 19.4x toward a 16.6x18.4x historical range.
Since President Trump's April 2 tariff announcement, volatility has surged: the S&P 500 briefly entered bear territory and remains more than 6.5% lower year-to-date and about 11% below its February peak. A three-day rally this week eased losses as trade tensions cooled and earnings topped forecasts.
The outlook highlights risks that renewed tariff uncertainty could tip real GDP into about 1% year-on-year contraction, Senyek's model shows, underscoring how policy shifts might deepen a downturn.
This article first appeared on GuruFocus.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
34 minutes ago
- Yahoo
3 Top AI Stocks to Buy in June 2025
Nvidia continues to dominate the AI market with cutting-edge chips, a robust software ecosystem, and advanced networking technologies. Broadcom has emerged as a prominent player in AI infrastructure, leveraging its custom AI chips and VMware software stack. CoreWeave is seeing explosive growth with Nvidia's backing. 10 stocks we like better than Nvidia › The U.S. equity market made a strong recovery in May 2025, fueled by robust earnings, decreasing trade tensions, and rising investor confidence in the U.S. economy -- a significant improvement compared to the market's performance in April 2025. Now, Deutsche Bank analysts have raised the target for the benchmark S&P 500 index from 6,150 to 6,550 by the end of 2025. Given this renewed market optimism, artificial intelligence (AI) stocks are poised to be key beneficiaries of the next wave of capital inflows. Long-term investors can benefit from this trend by investing in these high-quality, artificial intelligence (AI)-powered companies that offer significant growth potential in the evolving market landscape. June is a good time to take a closer look at these three top AI stocks. Nvidia (NASDAQ: NVDA) has reported stellar results for the first quarter of fiscal 2026 (ended April 27, 2025). The company reported revenue of $44.1 billion, representing a 69% year-over-year increase. Nvidia also generated a solid $26 billion in free cash flow. Nvidia currently accounts for nearly 80% of the AI accelerator market. While a dominant presence in AI training workloads, the company is also focused on inference (real-time deployment of pre-trained models) workloads. The company is at the forefront of handling reasoning workloads (computationally intense and complex inference workloads) with its Blackwell architecture systems. Major cloud providers are already deploying these chips at a massive scale -- almost 72,000 GPUs weekly -- and plan to ramp up even more in the coming quarter. Hence, Blackwell is powering the next phase of AI where technology is thinking longer, solving problems, and giving better answers than just responding with pre-written answers. Besides hardware leadership, Nvidia's robust software ecosystem has ensured developer lock-in and a sticky customer base. With the CUDA parallel programming platform, TensorRT for deployment, and NIM microservices for inference, clients find it extremely costly and time-consuming to switch to competitors. The company has also built a healthy networking business, with this segment's revenue growing 64% quarter over quarter to $5 billion in the first quarter. Thanks to the technological superiority of its comprehensive ecosystem, Nvidia managed to provide a healthy outlook for fiscal 2026's Q2, despite its revenue being negatively affected by nearly $8 billion due to export restrictions for the Chinese market. Nvidia stock trades at 31.8 times forward earnings, which is not a particularly cheap valuation. But considering its growth trajectory and competitive advantages, Nvidia is a smart AI pick now, even at elevated valuation levels. Broadcom (NASDAQ: AVGO) has emerged as a prominent AI infrastructure player in 2025. The company's custom AI chips and networking solutions are being increasingly used by three prominent hyperscaler clients -- rumored to be Alphabet, Meta Platforms, and Chinese company ByteDance -- to optimize the execution of their specific workloads. CEO Hock Tan expects the three hyperscalers to generate a serviceable addressable market (SAM) of $60 billion to $90 billion in fiscal 2027. Additionally, the company is engaging with four additional hyperscalers to develop custom chips, underscoring the even larger market potential. Beyond custom chips, Broadcom is building the critical networking infrastructure that enables the training and deployment of large and powerful frontier AI models. The company's recent $69 billion acquisition of VMware positioned it as a key player in the enterprise software and hybrid cloud infrastructure space. With VMware's cloud orchestration and virtualization technologies, Broadcom can offer full-stack AI infrastructure solutions to its clients. Broadcom stock currently trades at 37.8 times forward earnings. However, considering its critical role in building global AI infrastructure, the company is an excellent pick, despite the rich valuation. Previously a cryptocurrency mining operator, CoreWeave (NASDAQ: CRWV) has now positioned itself as a prominent "AI Hyperscaler." Unlike traditional hyperscalers such as Amazon's AWS, Microsoft's Azure, or Alphabet's Google Cloud Platform, which are primarily designed for general-purpose applications, CoreWeave's cloud infrastructure has been specifically designed for AI and machine-learning workloads. The company has established an extensive network of 33 purpose-built AI data centers across the United States and Europe. Solid demand for CoreWeave's specialized AI-first cloud infrastructure is directly driving its exceptional financial performance. The company reported $982 million in revenue in the first quarter of fiscal 2025, up 420% year over year. At the same time, the company's adjusted operating income rose 550% year over year to $163 million. This highlights that the company is on its way to becoming profitable, despite the high level of capital expenditures typical in the AI data center business. The company had a massive $25.9 billion revenue backlog from multi-year contracts at end of the first quarter. CoreWeave's strategic partnership with Nvidia is proving to be a significant competitive advantage. The deep relationship has given the company preferential access to Nvidia's cutting-edge GPUs and advanced networking technologies. With Nvidia having more than a $2.5 billion equity stake in CoreWeave (at current prices), the latter is practically assured of continued access to next-generation GPUs in the coming years. CoreWeave stock currently trades at 37.5 times sales, which seems quite rich. However, the elevated valuation is justified considering the company's huge addressable market, robust contract backlog, and impressive financial performance, making it a buy now. Before you buy stock in Nvidia, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Nvidia wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $669,517!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $868,615!* Now, it's worth noting Stock Advisor's total average return is 792% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. 3 Top AI Stocks to Buy in June 2025 was originally published by The Motley Fool
Yahoo
an hour ago
- Yahoo
Pre-Markets Flat Ahead of CPI, PPI & Possible Trade Deals
Monday, June 9, 2025In terms of scheduled economic reports, we're starting off a new trading week slowly. Pre-market futures are up marginally across the board — Dow +44 points, S&P 500 +9 and the Nasdaq +17 points. Overall, these indexes are roughly flat year over year, although the S&P 500 grew above 6K for the first time since late negotiations between China and the U.S. have remained ongoing, and while we have no new details emerging at this hour, we still see a pending rare-earth minerals deal between China and the top three automakers in the U.S., which will help facilitate auto building and deliveries this year. That said, a comprehensive trade deal between the world's two biggest economies remains elusive. The current deadline before announced tariffs manifest themselves is July 9th. Our week's biggest market data comes mid-week, when on Wednesday morning the May print for Consumer Price Index (CPI) is expected to remain steady at +0.2%, with year-over-year up 20 basis points (bps) from a month ago to +2.5%. On the core side — stripping out volatile food and energy prices — analysts see headline up 10 bps to +0.3%, +2.9% on core year over year, also up 10 headline CPI is also known as the 'Inflation Rate,' and April's +2.3% marks the low point over the past year. We hadn't been lower on this metric since way back in February on 2021, at the foothills of the Great Reopening. This is as close as we have been to the Fed's optimal +2% inflation rate. May's Producer Price Index (PPI) comes out Thursday morning, and this is expected to revert back to positive +0.2% from April's multi-year low -0.5%. (This was the deepest cut to PPI since April 2020 — near ground-zero of the Covid pandemic.) A +0.2% gets us back to where we were in February of this year. Year-over-year PPI on headline reached +2.4% in April, with core year over year +3.1%. This sounds bad relative to the near-2% levels of these other price indexes, but keep in mind core PPI year over year back in March was up to +4.0% — notching a 2-year high. Much of this information contains some tariff 'noise' that makes these indexes harder to view clearly. While we acknowledge that calendar Q1 earnings season has wrapped up, are earnings reports ever really 'done'? This week, on Wednesday afternoon, brings us Oracle ORCL results for fiscal Q4, which expects modest earnings growth on +8.8% in quarterly revenues. Thursday after the bell we'll hear from Adobe Systems ADBE and RH RH, formerly Restoration Hardware. Adobe is expected to fetch double-digit earnings growth, while RH's loss per share is expected to come down considerably. (You can see the full Zacks Earnings Calendar here.)Questions or comments about this article and/or author? Click here>> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Oracle Corporation (ORCL) : Free Stock Analysis Report Adobe Inc. (ADBE) : Free Stock Analysis Report RH (RH) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Business Insider
an hour ago
- Business Insider
Morgan Stanley shares a chart that fuels the argument for new stock-market highs
Morgan Stanley is growing more optimistic about the stock market as earnings revisions breadth improves. Improving breadth is being driven by more upward revisions, the bank said. The market is likely to overlook softer hard data in favor of forward-looking views of strong earnings. The vibes in the stock market are improving, and it's boosting the case for prices to rise from here. That's according to a note from Morgan Stanley's Mike Wilson. The bank's CIO and chief stock strategist pointed to a key signal that's sending a bullish signal: a sharp rebound in earnings revisions breadth, or the proportion of analysts who have raised their estimates minus the proportion who have lowered them. The indicator is now at -10%, a noticeable improvement from -25% during the height of tariff uncertainty in April, an indication that sentiment is recovering. The bank believes the indicator will continue to trend upward. A weak dollar could further bolster this earnings gauge, as US companies that do a lot of business overseas receive a boost in sales when the dollar is weaker. Once earnings revisions breadth turns positive, investors should expect forward EPS predictions to trend higher. Earnings revision breadth can be driven by either fewer downward revisions or more upward revisions. According to Morgan Stanley, the latter is the case today, which is good news for investors. More upward revisions tend to result in stronger overall stock market performance, historically leading to a 13% increase in the S&P 500 over a 12-month span. When fewer downward revisions are the driving factor, the S&P 500 has historically returned 8% over the next 12 months. Morgan Stanley's 12-month price target for the S&P 500 is 6,500, a potential gain of 8% from current levels. Investors should pay more attention to the improvement in forward-looking earnings revision breadth rather than lagging hard data, according to Morgan Stanley. The bank sees April stock market lows as the end of a year-long trend of downward earnings revisions, and expects the rate of change on earnings revision breadth to be the primary driver of equity prices going forward. "In our experience, when revisions breadth is accelerating in a V-shaped manner from an extreme low, equity markets typically remain supported and pullbacks remain shallow and unsatisfying (like the past 6 weeks)," Wilson wrote. The recent outperformance of cyclical stocks also points to a market more focused on forward-looking earnings revisions than backward-looking hard data. These areas of the market are especially sensitive to economic growth and earnings, and they're picking up momentum and providing a tailwind to the overall stock market. While it's possible that inflation could creep up over the summer as the pull-forward effect of tariffs fades, Morgan Stanley believes the bulk of the tariff pain appears to be already priced in following the April 2 tariff announcements. Policy headwinds should ease soon, as Trump's term began by front-loading disruptive tariff policies and will transition to more pro-growth initiatives like deregulation and tax cuts. Over the last month, the market has has rallied over 20% from April lows despite a first quarter GDP contraction weakening manufacturing data. As long as earnings revisions breadth continues trending upwards, Morgan Stanley believes the stock market will continue to overlook short term weakness in hard data.
