Catenaa, Tuesday, May 13, 2025- Goldman Sachs lifted its three-month S&P 500 index target to 5,900 points due to easing trade tension between the US and China, but it says there are still uncertainties.
A note by Goldman Sachs analyst David Kostin and team, sent to clients, said that they have raised their three-month target for US equities to 5,900 — or a gain of less than 1% from current levels, implying that the recent advance is set to stall.
The upgrade came after stocks rallied on Monday on Wall Street after negotiators from the world’s two largest economies agreed to temporarily lower tariffs, with traders betting that a US recession can be avoided
“Already-optimistic market pricing of the economic growth outlook as well as uncertainty surrounding the magnitude of impending slowdown in economic and earnings growth will likely keep a ceiling on equity multiples during the next few months,” the strategists wrote in a note.
The team sees the S&P 500 Index reaching 6,500 in the next 12 months, up from 6,200 previously. The new estimate implies a gain of about 11% from Monday’s close.
Goldman Sachs cut its S&P 500 forecasts twice in March, citing higher recession risk and tariff-related uncertainty. The strategists said that while such concerns have eased with the agreement between the US and China, and Big Tech stocks should especially recover, the broader earnings outlook is uneven.
“Despite the recent improvement in the growth outlook, tariff rates will likely be substantially higher in 2025 than they were in 2024, putting pressure on profit margins,” they wrote.
The team recommends investors focus on shares of companies with high pricing power that can maintain margins amid elevated input costs.
US stocks opened green on Tuesday morning, except for the Dow Jones, which was marginally down.
