Economist and market strategist Ed Yardeni has been a consistent bull in recent years and as President Donald Trump took office. But he's now cutting his 2025 and 2026 S&P 500 targets, as old leaders such as Tesla and Nvidia lead the downside.
"It has dawned on Wall Street (and us!) that President Trump's tariffs aren't negotiating chips to help the US lower tariffs around the world, promoting free trade. They're trade barriers, triggering other countries to respond in kind, and they jeopardize US inflation and economic growth," wrote Yardeni, president of Yardeni Research.
Yardeni Research, like many on Wall Street, was that Trump was mostly "bluffing." But shortly after taking office, Trump has imposed major tariffs on Canada, Mexico, China as well as steel and aluminum imports generally, already far exceeding what he did in his first term. And much more is coming in the next few weeks.
Yardeni Cuts S&P 500 Price Targets
So, citing rising stagflation risks, Yardeni Research is cutting its best-case year-end S&P 500 target to 6,400 from 7,000. It's also cutting its 2026 S&P 500 target to 7,200 from 8,000.
That's a change from as recently as March 3, Yardeni wrote, "We continue to bet on the resilience of the American economy."
Yardeni's lowered S&P 500 target follows moves by HSBC and Goldman Sachs. On Monday, HSBC downgraded U.S. stocks to neutral while giving European stocks a double upgrade to overweight. On Tuesday, Goldman cut its year-end S&P 500 target to 6,200 from 6,500 while also trimming its GDP growth production to 1.7%.
Expects Trump To Back Off On Tariffs
For now, Yardeni is sticking with prior projections that S&P 500 companies' combined earnings per share will reach $285 in 2025 and $320 next year. But there's a catch.
These earnings estimates assume the economy keeps growing. "That's if President Trump relents, as we expect he will to avoid a recession that would cost the Republicans their majorities in both houses of Congress in the mid-term elections in late 2026."
On the upside, Yardeni noted that Wednesday's tame CPI inflation report may give the Federal Reserve more room to counter possibly tighter government fiscal policy, especially with Trump tariffs included.
Futures Rise As Shutdown Risk Wanes; Trump Tariffs Slam Market
S&P 500
The S&P 500, since hitting 6,147.43 on Feb. 19, has tumbled to 5,521 as of Thursday's close, entering an intermediate correction as investors react to the aggressive Trump tariffs and back-and-forth headlines. Tesla stock and Nvidia have plunged below their 200-day lines.
Even with their lowered targets, Yardeni Research and Goldman expect the stock market to higher by year-end than is now.
