RBC lowers S&P 500 year-end goal, citing financial development considerations

One other Wall Avenue strategist is reducing her year-end goal on the S&P 500 (^GSPC), citing financial development considerations.

Following the S&P 500’s current 10% drawdown, RBC Capital Markets head of US fairness technique Lori Calvasina lowered her year-end goal to the S&P 500 to six,200 from 6,600. Calvsina’s revised outlook on the S&P 500 comes after each Goldman Sachs and Yardeni Analysis lowered their targets final week.

“Whereas we don’t imagine {that a} pullback past the ten% drawdown that has already been sustained is inevitable, we do imagine that the trail for shares between now and December has gotten rockier with stronger headwinds,” Calvasina wrote in a word to shoppers on Sunday night time.

A gloomier outlook on US financial development from the RBC Capital Markets economics workforce contributed to the extra subdued S&P 500 projection. RBC’s financial forecasters now venture the financial system to develop 1.6% this yr, down from a previous estimate of two%. Calvsina famous that the inventory market has typically fallen in years when GDP is in a “sluggish” vary of 1.1%-2%.

“Some financial forecasters across the Avenue have began to dial down their 2025 GDP forecasts, however are usually not calling for a recession,” Calvasina wrote. “Traditionally, the dialing down of financial development by itself presents a big headwind for the inventory market to beat.”

Goldman Sachs chief US fairness strategist David Kostin additionally highlighted a minimize to GDP forecast from Goldman’s economics workforce when transferring his goal to six,200 from 6,500.

“Our revised estimates replicate the not too long ago decreased GDP development forecast of our US Economics workforce, a better assumed tariff price, and better stage of uncertainty that’s sometimes related to a higher fairness threat premium,” Kostin wrote.

With slower financial development anticipated and several other firms already trimming their first quarter forecasts, Calvasina now sees earnings per share for the S&P 500 ending 2025 at $264, decrease than her workforce’s prior projection of $271. Calvsina additionally tasks a decrease doable bear case, now seeing a possible situation the place the S&P ends 2025 at 5,550, down from a previous forecast of 5,775. The bear case would symbolize one other 2% fall for the benchmark index from present ranges.

For now, the brand new base case of 6,200 bakes in the concept the S&P 500 has possible seen — or closed close to —its lows for the yr. However Calvasina’s conviction on that decision “is not extremely excessive.”

Current survey knowledge, from each shoppers and companies, have deteriorated over the previous a number of months as considerations over the impression of President Donald Trump’s tariff insurance policies have weighed available on the market temper. For now, there hasn’t been a lot feed-through from these so-called gentle knowledge factors to arduous knowledge like the month-to-month jobs report.