Goldman Sachs Lifts S&P 500 Forecasts Amid Easing Tariff Risks After US-China Trade Truce

Global investment firm Goldman Sachs has reversed course and raised its targets for S&P 500 amid easing tariff risks as a trade truce between the US and China fuelled sentiment among investors.

To that effect, Goldman Sachs now forecasts the S&P 500 to hit the 6,5000 mark in 2025, up from its previous estimate of 6,2000 points. The new forecast also reflects an upside potential of 11% from Monday’s closing level.

The target upgrade also coincided with a time when indices on the Wall Street logged strong gains after the two of the world’s largest economies agreed to cut down on tariffs, for a 30-day period. The positive development sparked hopes of the two countries reaching a unanimous trade deal, potentially averting the risks of a US recession. Despite that though, Goldman Sachs is yet to turn completely bullish over the fate of the US economy as well as the S&P 500.

 “Already-optimistic market pricing of the economic growth outlook as well as uncertainty surrounding the magnitude of impending slowdown in economic and earnings growth will likely keep a ceiling on equity multiples during the next few months,” the firm stated in its note.

Meanwhile, Goldman Sachs was among the initial investment firms that had slashed its targets for the S&P 500 back in March. The investment firm had reduced its estimates for the broader index twice in March as recession risks and tariff triggered uncertainty ran deep.

As of now, the firm admitted that such concerns have since then, eased out, ushering cautious optimism. In particular, the firm believes that while major technology companies may especially recover hereon, the broader earnings outlook still remains hazy.

“Despite the recent improvement in the growth outlook, tariff rates will likely be substantially higher in 2025 than they were in 2024, putting pressure on profit margins,” Goldman Sachs wrote.

Looking ahead, the investment firm suggests investors to focus on stocks of companies with high purchasing power to be able to sail through the period of high inputs costs without eroding margins.