With Trump tariff jitters, S&P 500 to finish year nearly even with 2024

The S&P 500 will finish the year near current levels, according to a Reuters poll, after many strategists in recent months cut their 2025 forecast for the index over uncertainty surrounding U.S. President Donald Trump’s tariffs.

Based on the median forecast of 51 equity strategists, analysts, brokers and portfolio managers collected May 15-28, the year-end target for the benchmark S&P 500 is 5,900, down from 6,500 in a February poll by Reuters. The S&P 500 ended Tuesday at 5,921.54.

The market will remain choppy, strategists said, while seven out of 14 respondents who answered a question on profit growth said S&P 500 earnings will be marginally higher in 2025 than in 2024 and two said significantly higher. Five said they would be marginally lower.

Sameer Samana, head of global equities and real assets at Wells Fargo Investment Institute, said the firm lowered its year-end target to 6,000 recently from 6,500 set at the start of the year.

“Clearly earnings will be impacted by what’s going on with tariffs,” he said.

“Our belief is tariffs are a tax and some combination of U.S. consumers, U.S. companies along with international producers and companies will pay the taxes. In essence, that kind of wealth transfer comes out of earnings to a certain extent,” he added.

According to LSEG, S&P 500 earnings are expected to increase 8.4% in 2025 compared with 12.1% in 2024. But the 2025 estimate is down sharply from 14% growth estimated on January 1.

Trade developments have whipsawed the stock market this year, especially after Trump’s April 2 announcement of sweeping tariffs on imports globally.

In his latest move, Trump on Sunday backed down from his threat of a 50% tariff against the European Union, delaying its implementation until July 9 to allow for negotiations between the White House and the 27-nation bloc. The move prompted Brussels to fast track preparations for trade talks.

Following a Tuesday rally, the S&P 500 is up just 0.7% for the year. But strategists say the back-and-forth nature of tariff negotiations has made predicting what the index will do tough.

“It’s very difficult to forecast given the tariff uncertainty and the changing dynamics that seem to happen daily,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

“There’s just a higher risk premium that has to be put on stocks, and that’s going to be with us through the rest of this year.”

He said his firm’s “base” target is 5,600 for the S&P 500 for this year, but a “6,000 to 5,600 range seems very reasonable based on the tariff environment not really causing a recession or deteriorating corporate profits too much.”

Some strategists have raised their S&P 500 forecasts recently.

Last week, David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, wrote that the firm was increasing its year-end target to 6,000 from 5,800 partly because of a “solid first-quarter earnings season”.

Concerns over the U.S. debt load have added to recent jitters and a “sell America” view by some investors. Moody’s downgraded its U.S. credit rating on May 16, and the Republican-controlled U.S. House of Representatives passed Trump’s sweeping tax-cut bill last week. The bill goes to the U.S. Senate next for review where investors worry spending cuts could be whittled down, growing the deficit.

The S&P 500 posted gains exceeding 20% in both 2024 and 2023, helped by megacap technology stocks and optimism over the business potential of artificial intelligence.

While the S&P 500 technology sector remains down 1.7% so far for 2025, it has been bouncing back, and some investors still see it as a good bet going forward.

“Technology will likely remain volatile, but any downturns we get in tech, investors should use that as a long-term buying opportunity,” Saglimbene said, noting tech profit growth should hold up.

Samana said Wells Fargo Investment Institute likes energy, financials and communication services and noted the firm “took the opportunity in the middle of the pullback to upgrade tech.”