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Takeaways
- Goldman Sachs analysts have cut their projection for S&P 500 growth this year.
- They cited uncertainty around Trump's tariffs and other economic growth factors as reasons for the recent market sell-off.
- Analysts noted that the Magnificent Seven stocks have had a particularly heavy drag on the index over the past few weeks.
Goldman Sachs analysts have lowered their forecast for the S&P 500 amid uncertainty around the Trump administration’s tariffs and the US economy—and following a broad sell-off to start the week.
Analysts have lowered their projections for the benchmark index, which is now expected to reach 6,200 by the end of the year. This is down from 6,500 and represents an 11% premium over Tuesday’s close. This would mean a growth of only 5% by the end of 2024 instead of the 10.5% Goldman had forecasted.
Analysts Say Tariffs and Growth Uncertainty Drive Sell-Off
"The proximate causes of the market decline are the jump in policy uncertainty largely related to tariffs, concerns about the economic growth outlook, and a positioning unwind, especially among hedge funds," the analysts wrote in a Wednesday note.
Dragging the S&P 500 lower in recent weeks has been the Magnificent Seven, which Goldman analysts dubbed the “Maleficent 7” given their recent performance. All seven stocks were collectively down 14% from their 52 week highs over the past three weeks. The so-called S&P 493, without the impact of the Mag 7, is down just 1% over the same time, the analysts said.
Analysts said they have lowered their forecast because they expect corporate earnings and the gross domestic product to grow at a slower rate than their previous projections. This is due to “a combination of tax-like effects of rising tariffs and increased uncertainty, as well as tightening of financial conditions.”
Amid the heightened market uncertainty, the analysts recommended owning stocks "insulated from the major thematic drivers of ongoing market volatility."
The S&P 500 was recently moving lower, retreating about 0.4% in recent trading.
