RBC slashes S&P 500 target, says we are now “entering the second tier of fear”
RBC Capital Markets no longer thinks the S&P 500 will be higher in 2025, lowering its index target to 5,550 from 6,200.
Chief US Equity Strategist Lori Calvasina says that markets are “entering the second tier of fear,” adding, “Our old bear case for the index this year has become our new base case.”
The migration to a more intense state of market fear — from a garden-variety pullback to a growth scare — was catalyzed by Wednesday’s tariff announcements, she notes.
Slower economic and profit growth under a Trump administration that’s willing to inflict short-term pain on Corporate America will weigh on earnings and lead to a more stagflationary environment with lower multiples, spurring RBC’s darkening view for stocks. The team also reduced its earnings-per-share forecast by $6 to $258. That number assumes US economic growth of just 0.5% this year, with profit margins contracting slightly.
It’s the second time Calvasina has cut her outlook for the benchmark US stock index in the past three weeks. In mid-March, she had reduced her target from 6,600 to 6,200, citing changes to growth and inflation forecasts by her colleagues, a more subdued outlook for corporate profitability, and poor sentiment.
