Wall Street's S&P 500 forecast range is widening: Chart of the Week

Yahoo

22-03-2025

Three Wall Street strategy teams have cut their S&P 500 (^GSPC) outlooks amid the recent market drawdown in markets.
The calls all have a similar flavor. Economic growth forecasts have been falling as the uncertainty around President Trump's policy plans wears on. This comes counter to the environment many expected when consensus projected another year of strong economic growth for the US economy.
At a high level, there's also been a sentiment shift, with strategists now arguing that markets might no longer trade at the extended valuations seen over the past two years, and therefore the benchmark S&P 500 likely won't rise as much. There's also the simple fact that any rally in stocks is coming from a lower starting point and therefore might not see the massive rise required to reach prior targets.
Still, 16 of the 17 strategists we track at Yahoo Finance forecast the benchmark index rallying from here.
What stands out now, as the chart below shows, is that there's not much of a clear consensus besides a general idea that stocks will go up at least somewhat.
With an upside range as low as 6,200 and as high as 7,100, forecasters are calling for the S&P 500 to rally anywhere from about 10% to more than 26%.
Broadly, strategists feel the current hesitancy in the stock market will continue until there's more clarity on President Trump's policies. The extent to which stocks rally from there likely depends on the outlook for the economy and corporate profits.
Deutsche Bank chief strategist Bankim Chadha wrote in a recent research note that if the souring mood about the president's tariff plans prompts a "credible plan to resolve tariff uncertainty, it will allow the business cycle to continue."
If so, Chadha believes the S&P 500 could hit 7,000 this year.
Meanwhile, other strategists are starting to talk more about how the path ahead might not be so linear.
"While we don't believe that a pullback beyond the 10% drawdown that has already been sustained is inevitable, we do believe that the path for stocks between now and December has gotten rockier with stronger headwinds," RBC Capital Markets' Lori Calvasina wrote in a recent note when lowering her year-end S&P 500 target to 6,200 from 6,600.
Last week, Citi equity strategist Scott Chronert told us about a "sentiment shift" among investors over the past few months as more of their clients have been asking about the chances the S&P 500 hits their "bear case" of 5,500. This is a stark change from the past two years when the prevailing question was whether or not strategists had been bullish enough.
Given the recent drawdown, the question makes sense. Stifel's Barry Bannister is standing by his 5,500 year-end target for the index, the most bearish call on Wall Street entering the year. Bannister believes stocks will stay in the doldrums amid a period of slower economic growth and sticky inflation, which he notes is "historically adverse for the broad equity market."
For what it's worth, that kind of environment could be an interpretation of the Fed's most recent economic forecasts released on Wednesday, which showed the central bank revising inflation projections higher for this year while cutting its economic growth forecast.
RBC's Calvasina often calls her S&P 500 target a "compass, not a GPS," an idea this column has highlighted before. For now, the arrow is clearly pointed in one direction, with the majority of macro strategists arguing stocks will head higher at some point in 2025.
But it's hard not to acknowledge the needle on the compass might be wavering a bit, and the argument for where stocks are headed has become far more nuanced — and with less conviction — than the straight line higher of the S&P 500's past two years.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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