As the 2024 US election cycle heats up, Wall Street analysts are reassessing their projections for the main US share index amid growing concerns over the economic implications of President Donald Trump's trade decisions. In the past two weeks alone, a minimum of ten banks, including major firms like JPMorgan, Bank of America, and Evercore ISI, have revised their estimates downward for the S&P 500 index. This shift comes on the heels of Trumps announcement on April 2 to impose a base tariff of 10 percent on a wide range of US imports, in addition to higher reciprocal tariffs, which sent shockwaves through both domestic and international financial markets.

Since the initial levies were put into action, the S&P 500 has experienced a tumultuous decline of over 7 percent, reflecting heightened volatility in trading. In fact, the index has plummeted by 14 percent since reaching an all-time high on February 19, raising alarms among investors and analysts alike. In response to the mounting pressure, Trump has recently paused some reciprocal tariffs and carved out exemptions for smartphones and certain electronics, but many economists remain skeptical about the overall economic outlook.

Experts warn that the erratic nature of recent trade policy changes could have long-term repercussions for economic growth, with some suggesting that these fluctuations could potentially usher in a recession. Such a downturn would inevitably impact the earnings of publicly traded US companies. Scott Chronert, an analyst at Citigroup, articulated this sentiment in a recent note, stating, The goldilocks sentiment in place entering this year has given way to abject uncertainty.

The average end-of-year target for the S&P now stands at 6,012, a significant decrease from the previous estimate of 6,539 recorded at the end of 2022. The S&P 500 concluded this week at 5,283, suggesting that while fears about a slowdown are rising, strategists still anticipate a 14 percent increase in the index over the next few months. This projected gain, however, represents only a modest 2 percent rise for 2025, which is a stark contrast to the back-to-back rallies exceeding 20 percent seen in both 2023 and 2024.

The cautious tone adopted by Wall Street marks a significant departure from the optimism that characterized the beginning of the year. At that time, many in the market expected that the implementation of lower taxes and reduced regulations under a Republican administration would fuel corporate profits. However, the current landscape appears much bleaker.

On Friday, Citigroup adjusted its year-end forecast for the S&P 500 to 5,800, down from a previous estimate of 6,500. The bank has also lowered its earnings per share estimate for 2025 to $255, which is slightly below the average forecast of $262, as reported by Bloomberg data. Chronert noted that the recent sharp decline in US equities might be indicative of the first bear market specifically triggered by actions taken by a US president.

Meanwhile, JPMorgan revised its baseline target on April 7 to 5,200 from 6,500, taking into consideration the assumption of partial relief on tariffs. The bank stated, Even though we do not believe US Exceptionalism is over, this [liberation day] shock came at a time when valuation was rich, positioning was crowded, and leadership was particularly narrow.

In a somewhat more pessimistic outlook, Peter Berezin of BCA Research, who has the most conservative price target for the S&P 500 among analysts surveyed by Bloomberg, projected that the index could close this year at around 4,450, which would represent a substantial drop of 15 percent from current levels. He has also indicated that a US recession is likely to unfold within the next three months.

Theres a lot of groupthink on Wall Street, Berezin remarked, emphasizing the need for a more nuanced understanding of market dynamics.