Goldman changes tack again, raises 2025 S&P 500 target to account for easier tariffs

CNBC

13-05-2025

It's getting tough for even the most veteran Wall Street strategists to keep up with the changing trade landscape. Goldman Sachs' David Kostin hiked his 2025 S & P 500 target back to 6,100 from 5,900. The revised target implies upside of 4% from Monday's close. "We raise our S & P 500 return and earnings forecasts to incorporate lower tariff rates, better economic growth, and less recession risk than we previously expected," the Wall Street investment bank's chief U.S. equity strategist said in a note to clients. The revised outlook comes after the U.S. and China agreed to lower tariffs for 90 days as the two nations try to hammer out a broader trade deal. That sent stocks ripping higher on Monday. The S & P 500 and Nasdaq Composite surged 3.3% and 4.4%, respectively, while the Dow Jones Industrial Average soared more than 1,100, or 2.8%. "However, already-optimistic market pricing of the economic growth outlook as well as uncertainty surrounding the magnitude of impending slowdown in economic and earnings growth will likely keep a ceiling on equity multiples during the next few months," Kostin added. .SPX YTD mountain SPX year to date Kostin has changed his S & P 500 target multiple times already this year. The strategist began the year calling for the benchmark to end 2025 at 6,500. In early March, he cut his forecast to 6,200 — making Goldman the first of the major Wall Street shops to trim its year-end outlook. Later that month, he slashed his target again to 5,700 — the lowest at the time among those included in the CNBC Market Strategist Survey . Kostin later quietly increased his target to 5,900. His current forecast of 6,100 puts him fifth highest in the CNBC survey. "We continue to recommend investors focus on stocks with high pricing power that can maintain margins in the face of elevated input costs," he said. "Despite the recent improvement in the growth outlook, tariff rates will likely be substantially higher in 2025 than they were in 2024, putting pressure on profit margins." Elsewhere Tuesday morning on Wall Street, Baird upgraded Caterpillar to buy , citing easing trade pressures. "The easing of tariff impacts adds weight to 2025 as a trough EPS year and is likely to drive additional multiple expansion (particularly as EBIT margin has proven more resilient vs. Machinery peers), which should allow the stock to catch up with the S & P 500 after underperforming by ~15% over the past year," analyst Mircea Dobre wrote Tuesday.