RBC Capital Markets head U.S. strategist Lori Calvasina has significantly cut the year-end 2025 target for the S&P 500 to 6,200 from the previous target of 6,600—a reduction of approximately 6%. This revision reflects updates in RBC’s economic and rates strategy, which now anticipates slower GDP growth and persistent inflationary pressures.
Key Drivers Behind the Revision
Revised Economic Outlook:Calvasina noted that the new target aligns with the median of five valuation models that RBC uses to assess market direction. These models produce a broad range of outcomes—from below 5,700 to over 6,500—highlighting the prevailing uncertainty in the market.
Earnings Forecast Adjustments:RBC has also lowered its 2025 earnings forecast for the S&P 500 from $271 to $264. The downward revision is due to expectations of weaker economic growth, a robust U.S. dollar, and increased corporate caution over margins. Notably, RBC removed the modest margin expansion forecast from previous estimates, citing the unpredictability of new trade policies.
Market Sentiment and Technical Levels:The strategists observed that recent market weakness has pushed U.S. indices into oversold territory—levels not seen since 2022. Calvasina emphasized that deep bearish sentiment has historically been a precursor to market rebounds. The base-case forecast of 6,200 assumes that the recent market low (recorded on March 13) holds. However, if the index breaks significantly below this level, the revised bear-case scenario could come into effect, with the year-end level lowered further to 5,550 from 5,775.
Policy Uncertainty:Persistent uncertainty surrounding new trade policies and regulatory measures continues to dampen investor, consumer, and corporate confidence, contributing to the cautious outlook. Calvasina stressed that while some indicators suggest excessive pessimism, the risk of further downside remains if economic conditions deteriorate.
What This Means for Investors
Investors should be mindful of the mixed signals in the market. While some models hint at a rebound driven by cyclicals and undervalued growth stocks, the cautious tone from RBC reflects the potential for further market drawdowns if economic data continues to disappoint. Monitoring the evolving macroeconomic environment and upcoming policy announcements will be crucial for those looking to navigate these uncertain times.
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Conclusion
RBC’s downward revision of the S&P 500 target to 6,200 for year-end 2025 underscores a cautious outlook amid slower growth expectations, persistent inflation, and significant policy uncertainty. While the base-case scenario assumes that current support levels hold, investors should be prepared for further downside risks if the market fails to rebound. Keeping a close watch on both macroeconomic data and upcoming earnings events through reliable FMP APIs will be essential for making informed investment decisions in this volatile environment.
