Goldman Sachs cuts S&P 500 target as tech names struggle

In the United States, two prominent financial firms have recently revised their S&P 500 forecasts due to declining market conditions attributed to various economic factors. Goldman Sachs, marking itself as the first major bank to lower its expectations for 2025, adjusted its year-end S&P 500 target from 6,500 to 6,200, reflecting a modest gain of only 5% for the year. This decision comes amidst ongoing struggles faced by key technology stocks, notably referred to as the 'Magnificent Seven', which include major players such as Nvidia, Tesla, and Amazon. In the past month, these stocks have seen significant declines, contributing to a broader market downturn with the S&P 500 down nearly 8% during the same period. The market's struggles are being compounded by uncertainty surrounding the U.S. economic outlook, particularly in light of increased tariffs imposed by the Trump administration on imports from various nations. This tariff strategy has heightened concerns about potential stagflation—a scenario where inflation rises alongside stagnant economic growth. Analyst Ed Yardeni, recognized as one of Wall Street's more bullish strategists, has also adjusted his market forecasts, significantly lowering his best-case scenario S&P 500 target from 7,000 to 6,400. Yardeni warned that the tariffs, rather than serving as tools for negotiation, function more as trade barriers provoking retaliation from other countries, posing risks to U.S. inflation and economic growth. He highlighted that this trade policy could lead to heightened volatility within the markets, impacting consumer spending and corporate profits. As investor sentiment struggles under the weight of policy uncertainty and recent economic indicators, both Goldman Sachs and Yardeni Research have urged a cautious approach, advocating for investments in stocks that are more insulated from these overarching market drivers. Some of the suggested stocks include Bank of New York Mellon and Gilead Sciences, as these are seen as more resilient amid the existing market turbulence. Overall, the projections from these financial institutions underline a worrying trend in the market, as structural changes driven by trade policies continue to reverberate across various sectors, complicating the economic outlook for the remainder of 2025.