Another Wall Street strategist is lowering her year-end target on the S&P 500 (^GSPC), citing economic growth concerns.
Following the S&P 500’s recent 10% drawdown, RBC Capital Markets head of US equity strategy Lori Calvasina lowered her year-end target to the S&P 500 to 6,200 from 6,600. Calvsina’s revised outlook on the S&P 500 comes after both Goldman Sachs and Yardeni Research lowered their targets last week.
“While we don’t believe that a pullback beyond the 10% drawdown that has already been sustained is inevitable, we do believe that the path for stocks between now and December has gotten rockier with stronger headwinds,” Calvasina wrote in a note to clients on Sunday night.
A gloomier outlook on US economic growth from the RBC Capital Markets economics team contributed to the more subdued S&P 500 projection. RBC’s economic forecasters now project the economy to grow 1.6% this year, down from a prior estimate of 2%. Calvsina noted that the stock market has often fallen in years when GDP is in a “sluggish” range of 1.1%-2%.
“Some economic forecasters around the Street have started to dial down their 2025 GDP forecasts, but are not calling for a recession,” Calvasina wrote. “Historically, the dialing down of economic growth on its own presents a significant headwind for the stock market to overcome.”
Goldman Sachs chief US equity strategist David Kostin also highlighted a cut to GDP forecast from Goldman’s economics team when moving his target to 6,200 from 6,500.
“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.
With slower economic growth expected and several companies already trimming their first quarter forecasts, Calvasina now sees earnings per share for the S&P 500 ending 2025 at $264, lower than her team’s prior projection of $271. Calvsina also projects a lower possible bear case, now seeing a potential scenario where the S&P ends 2025 at 5,550, down from a prior forecast of 5,775. The bear case would represent another 2% fall for the benchmark index from current levels.
For now, the new base case of 6,200 bakes in the idea that the S&P 500 has likely seen — or closed near —its lows for the year. But Calvasina’s conviction on that call “isn’t incredibly high.”
Recent survey data from consumers and businesses has deteriorated over the past several months as concerns over the impact of President Trump’s tariff policies have weighed on the market mood. For now, there hasn’t been much feed-through from those so-called soft data points to hard data like the monthly jobs report.
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