Goldman Sachs Slashes S&P 500 Target to the Lowest on Wall Street

Goldman Sachs has recently revised its outlook for the S&P 500, reducing its year-end target to 6,200 from the previous 6,500. This 4.6% decrease reflects growing concerns over policy uncertainties, particularly related to tariffs, and a more cautious economic growth forecast. The adjustment positions Goldman Sachs among the most conservative on Wall Street regarding expectations for the benchmark index.​

The downward revision is influenced by several factors, including increased policy uncertainty, especially concerning tariffs, and concerns about the economic growth outlook. The S&P 500 has experienced a 9% decline from its all-time high, with a significant portion of this downturn attributed to a 14% drop in the share prices of the so-called 'Magnificent 7' stocks, which Goldman Sachs now refers to as the 'Maleficent 7'. These stocks have seen their price-to-earnings (P/E) ratio decrease from 30x to 26x during this period. ​

In addition to the reduced S&P 500 target, Goldman Sachs has adjusted its earnings per share (EPS) growth forecasts. The 2025 EPS estimate has been lowered to $262 from $268, and the 2026 estimate to $280 from $288. These revisions are based on tempered GDP growth forecasts, increased assumed tariff rates, and a higher equity risk premium due to elevated uncertainty. ​

The broader market has felt the impact of these adjustments. The S&P 500 recorded a 4.6% decline in the first quarter of 2025, marking its worst quarterly performance since 2022. The Nasdaq Composite experienced an even steeper drop of 10.5% during the same period. Technology stocks, in particular, have been heavily affected, with companies like Tesla and Nvidia seeing significant declines. ​

Goldman Sachs' revised outlook underscores the challenges facing the U.S. economy, including the potential for stagflation—a combination of stagnant economic growth and rising inflation—driven by increased tariffs. The firm has raised its recession probability to 35%, up from 20%, and adjusted its inflation forecast to 3.5%, with GDP growth projections lowered to 1%. ​

Investors are advised to brace for continued market volatility and consider strategies that focus on stocks with stable earnings growth and minimal correlation with major market trends. As the economic landscape evolves, staying informed and adaptable will be crucial for navigating the uncertainties ahead.