Goldman Sachs has slashed its S&P 500 target for the second time this month, highlighting the growing risks to economic growth and increasing uncertainty surrounding US tariffs. The firm’s new target of 5,700 points reflects just a 2% gain from the S&P 500’s most recent close, making it one of the lowest estimates among Wall Street strategists, according to Bloomberg data.

Reasons Behind the Revised Forecast

David Kostin, Goldman’s chief US equity strategist, explained the downward revision in a recent note:

• Slowing economic growth and a higher risk of recession are major concerns.

• Trade war uncertainty is forcing investors to reassess equity valuations.

• A higher equity risk premium is warranted, leading to lower valuation multiples.

Kostin warned that if economic conditions worsen further, the stock market’s valuations could decline even more than currently anticipated.

Recession and Tariff Concerns Weigh on Stocks

Goldman Sachs had already cut its S&P 500 target from 6,500 to 6,200 on March 11. However, with further declines in major technology stocks and intensifying trade war concerns, the firm revised the forecast down again to 5,700.

The US stock market has been under pressure as investors worry about the economic impact of President Donald Trump’s aggressive tariff strategy.

• Trump reaffirmed plans to impose reciprocal tariffs on all countries starting April 2.

• This move has increased uncertainty in financial markets, further weighing on investor sentiment.

Impact on US Economic Growth

In addition to lowering its S&P 500 target, Goldman Sachs economists also downgraded their US GDP growth forecast for 2025.

• The average US tariff rate is now expected to rise by 15 percentage points in 2025, as per Goldman’s latest estimates.

• As a result, the firm has lowered its 2025 US GDP growth forecast by half a percentage point to just 1% (on a Q4 vs. prior-year basis).

This weaker growth outlook further supports Goldman’s cautious stance on equity markets.

Outlook for Investors

Goldman Sachs’ revised target suggests a more challenging environment for stock market investors in 2025.

• Valuation pressures are expected to persist, especially if investor confidence declines further.

• Technology stocks, which have driven much of the recent market growth, could see continued weakness.

• Rising tariffs and trade war risks remain key downside risks for equities.

In conclusion, Goldman Sachs’ second downward revision of its S&P 500 target underscores the heightened risks facing the US stock market. Investors will be closely monitoring economic data, corporate earnings, and policy decisions to navigate the uncertain market environment.

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