Market Forecasts Indicate S&P 500 Steady Close Amid Tariff Uncertainty

Market Forecasts Suggest Steady Close for S&P 500 Analysts project that the S&P 500 will conclude the year close to its current value, as indicated by a recent Reuters poll. This assessment comes in the wake of multiple revisions to the 2025 forecasts due to ongoing uncertainties related to U.S. trade policies, particularly tariffs imposed by President Donald Trump. The median estimate from a group of 51 financial professionals—including equity strategists, analysts, and portfolio managers—collected between May 15-28, sets the year-end target for the S&P 500 at 5,900, a notable decrease from the previous estimate of 6,500 reported in February. The index was noted to be at 5,921.54 at the close on Tuesday. Market analysts indicate that volatility is likely to persist. Among those who provided input on earnings growth for the S&P 500, half expect earnings to increase slightly in 2025 compared to 2024, while two respondents anticipate a significant uptick. Conversely, five analysts project a decline. Sameer Samana, who leads global equities at Wells Fargo Investment Institute, recently adjusted his firm’s year-end target for the index from 6,500 to 6,000. He remarked on the substantial impact of tariff policies on corporate earnings, stating, “Clearly earnings will be impacted by what’s going on with tariffs.” He elaborated that tariffs act as a tax burden, affecting consumers, U.S. companies, and international counterparts alike, effectively reallocating wealth from earnings. The anticipated growth in S&P 500 earnings for 2025 is now pegged at 8.4%, a decrease from an earlier expectation of 14% at the beginning of the year, and down from 12.1% for 2024. Market fluctuations throughout the year can be attributed to tumultuous trade developments, particularly following Trump’s announcement of sweeping tariffs on imports in April. In a recent update, Trump postponed a proposed 50% tariff against the European Union to July 9, allowing for further negotiations with the bloc, which has prompted swift preparations for trade discussions in Brussels. Despite a recent rally, the S&P 500 has managed only a modest gain of 0.7% since the year began. Anthony Saglimbene, chief market strategist at Ameriprise Financial, expressed concerns about forecasting in the current climate of tariff instability, stating, “It's very difficult to forecast given the tariff uncertainty and the changing dynamics that seem to happen daily.” He believes that a persistent “risk premium” must be applied to stocks throughout the remainder of the year, estimating a target range between 5,600 and 6,000 for the index. In contrast to prevailing cautious perspectives, some strategists have recently revised their S&P 500 targets upwards. David Lefkowitz from UBS Global Wealth Management has increased his firm’s projection to 6,000 from 5,800, citing a strong earnings season in the first quarter as a contributing factor. Concerns surrounding the national debt have also added to investor anxiety. Following Moody’s downgrade of the U.S. credit rating on May 16, some investors have adopted a “sell America” mentality. The Republican-controlled House recently passed Trump's extensive tax-cut legislation, which now awaits Senate deliberation amidst fears of reduced spending cuts potentially worsening the deficit. The S&P 500 has achieved over 20% gains in both 2023 and 2024, largely fueled by major technology firms and the optimism surrounding the future of artificial intelligence. Although the technology sector has seen a slight decline of 1.7% thus far in 2025, there are signs of recovery, and investors remain optimistic about its long-term prospects. Saglimbene noted, “Technology will likely remain volatile, but any downturns we get in tech, investors should use that as a long-term buying opportunity.” Wells Fargo Investment Institute is currently favoring investment in sectors such as energy, financials, and communication services, while advising caution in consumer staples and utilities. Meanwhile, Eric Teal, chief investment officer of Comerica Wealth Management, anticipates the Dow Jones Industrial Average will close the year at 48,000, predicting stronger performance compared to the S&P 500 due to a broader mix of robust companies and reduced reliance on technology stocks. <p