From Yahoo Finance: 2025-05-13 11:46:00

Wall Street strategists are optimistic about the S&P 500 after a 90-day truce on tariffs between the US and China sparked a market rally. Goldman Sachs raised its year-end target to 6,100 while Yardeni Research increased theirs to 6,500, citing reduced fears of a growth slowdown.

Goldman Sachs chief US equity strategist David Kostin attributes the raised forecasts to lower tariff rates, better economic growth, and reduced recession risk. Yardeni Research president Ed Yardeni notes that the negative wealth effect on consumers from stock price drops is now insignificant after the market rally.

The US and China announced a 90-day tariff delay, lowering the estimated effective US tariff rate from 24% to 14%. Wall Street now sees a recession as less likely in 2025, a reversal from previous months when concerns over an economic slowdown led to lowered S&P 500 targets.

Goldman’s recession probability for the next 12 months dropped to 35% with a GDP forecast of 1% growth. Yardeni now predicts 2025 GDP in a range of 1.5% to 2.5%, up from a prior projection of 0.5% to 1.5%. Increased GDP projections lead to higher earnings forecasts for the S&P 500.

Despite optimism, Goldman’s Kostin notes that economic growth uncertainty and potential slowdowns could limit equity multiples in the coming months. The improved economic outlook may keep a ceiling on equity multiples, impacting market pricing and confidence in the fundamentals of large stocks.

Read more: Wall Street strategists raise outlooks for US stocks as China tariff pause eases growth fears