RBC is less bearish on US stocks, but far from bullish

RBC Capital Markets bumped up its 2025 target for the S&P 500 — but still sees the benchmark index slipping through year-end.

Chief US Equity Strategist Lori Calvasina now sees the S&P 500 ending the year at 5,730 after having slashed her target to 5,500 from 6,200 shortly after so-called Liberation Day. The team uses a quintet of models to arrive at different S&P 500 targets, which range from about 5,500 to 6,400 (with a median of 5,730).

“Overall, both our valuation and EPS models bake in for the base case inflation in the upper 2% range, three Fed cuts starting in September, real GDP of 1.3% for the full year, margin contraction (more significant in the back half of the year than in 2Q), and some relief on interest expense driven in part by several cuts from the Fed starting in September,” she wrote. “This is a better macro backdrop than the more severe stagflation scenario that we baked into our numbers back in early April, but is not as strong as the one we were baking in back in January.”

This analysis implies that thawing of trade tensions has been priced in, Calvasina added, leaving her neutral on stocks.