Wall Street Banks Trim S&P 500 Outlooks

Banks are scaling back their 2025 outlooks for U.S. stocks as uncertainty about the economy and markets escalates.

The benchmark S&P 500 could slump to 4,700, a further 7%-8% decline from Friday’s close, if President Donald Trump sticks with his tariff plans or the Federal Reserve doesn’t ease interest rates, Morgan Stanley analysts wrote.

The analysts said they had offered a 5,100-5,200 technical support level for the S&P 500 last Thursday but noted that “with the market quickly trading there on Friday and overnight futures down another 3-5% so far, our thoughts turn to the next area of support, which lies closer to the 200-week moving average, or 4700.”

Oppenheimer analysts on Monday cut their target to 5950, about a 17% premium to Friday’s close, from 7100. Read Investopedia’s live coverage of today’s trading here.

“The equity market appears oversold in our view,” Oppenheimer’s analysts wrote, “with uncertainty at levels investors find hard to embrace along with what we call ‘a negative pitch book’ that seemingly projects negative outcomes to infinity that’s taken hold in the near term of trader, investor, and consumer sentiment. 

The index closed at 5,074.08 Friday, having suffered the seventh-worst week in the last 25 years, a decline of more than 9%. S&P futures are down 2.7% early Monday.

“Valuations also offer better support at that price so investors should be prepared for another 7-8% potential downside from Friday’s close if there is no line of sight to a less severe trade environment and the Fed remains firmly on hold,” Morgan Stanley’s analysts wrote.

Trump so far has shown no signs of backing down from the tariffs, while Fed officials have elected to keep their key interest rate steady. Fed Chair Jerome Powell said Friday that Trump’s larger-than-expected tariffs could stoke inflation and slow economic growth. 

This article has been updated to add context and the new Oppenheimer estimate.