A nearly 10% fall in the S&P 500 (^GSPC) has prompted Wall Street strategists to revaluate their bullish views headed into 2025.
And late Tuesday night, Goldman Sachs chief US equity strategist David Kostin became the first big name on the Street to lower their year-end price target for the S&P 500 following this drop, with Kostin cutting his year-end target to 6,200 from 6,500.
«We lower our 2025 year-end S&P 500 index target to 6200 (from 6500) to reflect a 4% reduction in our modeled fair-value forward P/E multiple (20.6x from 21.5x),» Kostin and his team wrote.
«Our new index target suggests an 11% price gain during the balance of the year, similar to our return estimate at the start of the year but from a lower starting point.»
Earlier this week, the S&P 500 nearly entered correction territory — defined as a 10% drop from its most recent high — as fears about the health of the US economy and uncertainty surrounding President Trump’s tariff policy shook investor confidence.
Goldman’s own economics team recently revised down its 2025 GDP forecast to 1.7% from a prior projection of 2.2% as impacts from tariffs and political uncertainty have weighed on the outlook.
Kostin flagged the GDP downgrade in his note on Tuesday, saying this slower growth forecast prompted a downward revision in its estimate for S&P 500 earnings growth this year to 7% from 9%.
«Our revised estimates reflect the recently reduced GDP growth forecast of our US Economics team, a higher assumed tariff rate, and higher level of uncertainty that is typically associated with a greater equity risk premium,» Kostin wrote.
«Weaker economic activity usually means weaker corporate earnings growth.»
Read more: What Trump’s tariffs mean for the economy and your wallet
Kostin noted a catalyst that improves the economic growth outlook, either evidenced by stronger economic data or a reduced tariff policy plan that could spur an upturn in stocks. On Wednesday, perhaps the first sign of better economic data emerged as a softer-than-expected inflation reading sent the major stock indexes higher at the market open.
And while Kostin may be the first strategist to outright lower their year-end target for the S&P, Kostin isn’t the only strategist who has recently warned that the path forward for US stocks likely looks different than last year’s forecasts.
«We have seen the US equity market on a rocky path higher through year-end, and have believed that our 6,600 can absorb a 5-10% drawdown,» RBC Capital Markets head of US equity strategy Lori Calvasina wrote in a note to clients on Sunday.
