Wall Street’s S&P 500 price targets are more a temperature check than a useful predictive tool for the stock market, says one strategist

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The recent selloff in the U.S. stock market blindsided Wall Street’s top forecasters, forcing many to swiftly slash their year-end S&P 500 targets after President Donald Trump’s ever-changing tariff plans sent financial markets into a tailspin. 

In the past month alone, at least 12 major Wall Street firms — including JPMorgan Chase & Co., Bank of America Corp., Goldman Sachs Group Inc. and RBC Capital Markets — have adjusted their year-end targets for the S&P 500, as Trump’s aggressive and far-reaching tariff policy has triggered a trade war that many investors worry could plunge the U.S. economy into a recession. 

However, most strategists still think stocks will recover by the end of 2025 — just not as dramatically as they had once predicted.

The revised estimates put Wall Street’s median year-end target for the S&P 500 at 5,950, implying an advance of more than 10% from Monday’s close of 5,405.97, according to a recent survey of Wall Street’s investment banks and research firms by MarketWatch (see table below). 

Heading into April 2, when the White House imposed a baseline 10% universal tariff on all imports along with higher levies on dozens of trading partners, the median year-end target for the S&P 500 was around 6,600.

That consensus then plunged nearly 10% in less than two weeks.

At the start of 2025, Wall Street firms projected the S&P 500 would end the year anywhere between 6,400 and 7,100. Now their forecasts have widened dramatically to a range of 5,200 to 7,000. Some firms — including Deutsche Bank, Wells Fargo Investment Institute and Morgan Stanley, have yet to update their price targets for the S&P 500 over the past month.

Now the question is: Should investors buy into these updated Wall Street predictions — or take them with a grain of salt?

“I think the chances that these forecasters get whipsawed are pretty high, because they all hit the button at the same time,” said Mark Hackett, chief market strategist at Nationwide Financial. “We saw about a 10% to 11% drop in the consensus in about a week or so, and that is very unusual.”

Hackett said that price targets for the S&P 500 are more “a temperature check” than “a useful predictive tool,” as history shows these targets are not an accurate predictor of the stock market.

Since 2000, Wall Street forecasters on average have missed the year-end price of the large-cap benchmark index by nearly 14% at the beginning of the year, he told MarketWatch via phone on Tuesday.

One of the most common methods Wall Street strategists use to calculate their S&P 500 targets is to multiply the estimated earnings per share for the large-cap index over the next 12 months by its forward price-to-earnings ratio.

However, this approach now faces unusual challenges. The first-quarter earnings season is in full swing, but the tariff impact on corporate profits remains unclear, said Tom Bruce, macroeconomic investment strategist at Tanglewood Total Wealth Management. 

“I don’t know how anyone could project earnings at this point. … The 90-day pause on reciprocal tariffs gives us some clarity, but beyond that, we don’t know where we’re going to be in 90 days,” Bruce told MarketWatch in a phone interview on Tuesday.

“Realistically, tariffs are going to have a profound impact on many corporate earnings, but I would say the outlook for earnings is very unclear, so any estimates based on earnings are kind of just uneducated guesses,” he said.

Full-year earnings expectations for the S&P 500 in 2025 have softened slightly over the past month, with Wall Street seeing the consensus EPS estimate at around $268.49 as of Friday, down from $271.05 in mid-March, according to FactSet data.

U.S. stocks finished lower on Tuesday as investors digested first-quarter earnings reports from large financial institutions in the absence of major trade-policy updates. The Dow Jones Industrial Average was off 0.4%, while the S&P 500 fell 0.2% and the Nasdaq Composite ended nearly flat, according to FactSet data.