Seven Major Banks Trim Earnings Forecasts for the S&P 500 in 2025
On the other end of the spectrum, Deutsche Bank maintains a more optimistic outlook, keeping its estimate at 7,000 points for the S&P 500.
The downward revision of S&P 500 projections by major Wall Street firms signals a marked shift in tone, reflecting growing concerns about the risks stemming from U.S. trade policy.
In a sign of increasing caution regarding the U.S. stock market’s trajectory, several top Wall Street firms have downgraded their S&P 500 forecasts for the remainder of 2025. Warnings of potential stagflation, the economic impact of new tariff policies, and a more uncertain global landscape are behind the shift in analyst sentiment.
Optimism Fading
The latest firm to join this trend is Jefferies, which cut its S&P 500 estimate from 6,000 to 5,300 points, cautioning that while a formal recession is not expected, the growth slowdown will directly impact corporate profits. The firm also raised concerns about the increased risk of stagflation—a combination of low growth and high inflation—following the reintroduction of tariffs by the Trump administration.
Since 2001, periods marked by stagflation characteristics have been associated with lackluster returns in the markets. As part of its adjustment, Jefferies reduced its expected price-to-earnings (P/E) multiple to 19 times, in line with the average over the past decade, applying that metric to a projected 2026 earnings per share of USD 280.
S&P 500 Bank Projections
J.P. Morgan remains even more conservative, with a target of 5,200 points, the lowest among the major firms. Goldman Sachs recently lowered its forecast from 6,500 to 6,200 points, citing political uncertainty and growth risks. Meanwhile, both Bank of America and Evercore revised their estimates down to 5,600 points. Oppenheimer also reduced its target to 5,950 points, marking a more than 16% cut from its previous projection.
On the other end of the spectrum, Deutsche Bank maintains a more optimistic outlook, keeping its estimate at 7,000 points, the highest among major investment banks.
In this new environment, Jefferies recommended adopting a more defensive stance in portfolios, underweighting cyclical stocks and focusing on sectors that have historically shown greater resilience during stagflation cycles. It also highlighted opportunities in “fallen angel” stocks—those with attractive valuations, strong profitability, and stable cash flows, along with positive or neutral earnings revisions.
Wall Street Forecast Cuts:
Jefferies: Downgrades its S&P 500 estimate to 5,300 points (from 6,000), warning about stagflation risks.
J.P. Morgan: Lowers its target to 5,200 points, the most conservative among major firms.
Goldman Sachs: Reduces its forecast from 6,500 to 6,200 points due to political uncertainty and lower expected growth.
Bank of America: Adjusts its target to 5,600 points, aligning with a moderate cooling scenario.
Evercore: Cuts its projection to 5,600 points, reflecting a defensive approach.
Oppenheimer: Lowers its estimate to 5,950 points, a 16% cut from its previous forecast.
Deutsche Bank: Maintains its optimistic view with a target of 7,000 points by year-end.
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