MW The bulls are back in town. Goldman and this Wall Street optimist are lifting their S&P 500 targets on tariff relief.

By Barbara Kollmeyer

Look for stocks with high pricing power, like Meta, says Goldman

While investors look set to take a breather from euphoric, tariff-deal-fueled gainths on Tuesday, some Wall Street strategists have wasted no time on a bullish steer.

Step right up Goldman Sachs, and our call of the day.

After warning just days ago that the S&P 500 SPX faced a further drop of 20% on a recession threat from tariffs, the bank's strategists late Monday lifted their six-month forecast corresponding to the end of 2025 to 6,100 from 5,900.

The S&P 500 came close to positive territory for the year, closing at 5,844 on Monday.

"We raise our S&P 500 return and earnings forecasts to incorporate lower tariff rates, better economic growth and less recession risk than we previously expected," said a team led by David Kostin, chief U.S. equity strategist.

In a separate note, chief economist Jan Hatzius cut the bank's recession odds to 35% from 45%, which encapsulates a smaller hit to GDP growth, reduced risk of higher Sino-U.S. tariffs causing production delays and an "encouraging signal about future tariff policy decisions."

Revised earnings per share forecasts from the bank now sit at $262 in 2025, up 7% year over year, versus 3% growth previously, and $280 in 2026, also up 7%, from 6% previously.

Strategists also lifted their 12-month price-to-earnings multiple on the index - what investors are willing to pay for each dollar of earnings - to 20.4 times from 19.5 times. They note that the current P-E multiple of 21 times ranks in the 90th percentile dating from 1990 and is 5% below the 22 times peak from earlier this year.

That new estimate of 20.4 times reflects "reduced uncertainty, faster earnings growth, lower inflation and renewed confidence in the fundamentals for the largest stocks in the index." But Kostin and his team caution that "still-elevated uncertainty poses risks to both earnings and valuation."

What stocks to focus on? Kostin and his team suggest sticking to names with "high pricing power that can maintain margins in the face of elevated input costs." Even with an improved growth outlook, tariff rates will be higher than last year, pressuring profit margins, they say.

Those stocks with higher pricing power outperformed those with lower pricing power during the 2018-2018 trade conflict:

Some stocks in their high-pricing power screens include Meta Platforms $(META)$, Electronics Arts $(EA)$, Playtika Holding $(PLTK)$, Booking Holdings (BKNG), Wingstop $(WING)$, Etsy $(ETSY)$, Doximity $(DOCS)$, Sherwin-Williams $(SHW)$, Paychex $(PAYX)$, Nordstrom $(JWN)$, Snap-On (SNA), Coca-Cola $(KO)$, Colgate-Palmolive $(CL)$ and Adobe $(ADBE)$.

Goldman strategists weren't alone with a bump up in their S&P 500 forecast. Ed Yardeni, the president of Yardeni Research, boosted his to 6,500 from 6,000 as he cut recession odds to 25% from 35%.

Wall Street's most bullish strategist at the moment is Wells Fargo Securities' Christopher Harvey, who is predicting a 2025 finish of 7,007 for the S&P 500.

The markets

U.S. stock futures (ES00) (YM00) (NQ00) are slightly lower after Monday's massive rally, Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y are softer, and gold (GC00) is recouping some losses as the dollar DXY gives back some gains.

   Key asset performance                                                Last       5d      1m      YTD      1y 
   S&P 500                                                              5844.19    3.43%   8.11%   -0.64%   11.93% 
   Nasdaq Composite                                                     18,708.34  4.84%   11.15%  -3.12%   14.16% 
   10-year Treasury                                                     4.461      15.90   12.20   -11.50   1.90 
   Gold                                                                 3262.3     -2.43%  1.10%   23.60%   39.28% 
   Oil                                                                  61.9       8.16%   0.55%   -13.87%  -21.84% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

In the spotlight, consumer prices for April are expected at 8:30 a.m. Economists expect headline prices to rise 0.2% and 2.4% annually, with core prices up 0.3% and 2.8%, respectively.

China has reportedly lifted a ban on Boeing $(BA)$ deliveries for the country's airlines.

Coinbase stock $(COIN)$ is surging on news the crypto-trading group will join the S&P 500 on May 19.

Hertz stock $(HTZ)$ is slumping after a wider loss and lower sales for the car-rental group.

AMC $(AMC)$ announced half-price movie tickets every Wednesday, starting in early July.

Apple $(AAPL)$ reportedly plans to use AI to help boost battery life for iPhone users.

President Donald Trump kicked off a Mideast tour with a visit to Saudi Arabia's Crown Prince Mohammed bin Salman.

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The chart

The chart from Bank of America's May fund manager survey shows gold was the "most crowded" trade for a second straight month, following a 24-month streak for "long Magnificent 7" stocks. A hot investment this year, gold plunged on Monday as havens lost their shine and perceived riskier assets such as stocks rallied.

Read: What a steepening gold futures curve says about demand for the yellow metal

Top tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   GME     GameStop 
   PLTR    Palantir Technologies 
   AAPL    Apple 
   AMZN    Amazon.com 
   TSM     Taiwan Semiconductor Manufacturing 
   COIN    Coinbase 
   MLGO    MicroAlgo 
   AMD     Advanced Micro Devices 

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-Barbara Kollmeyer

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May 13, 2025 06:55 ET (10:55 GMT)

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