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RBC Capital Markets (RY+0.79%) is the latest investment bank to take a knife to its S&P 500 forecast, cutting its year-end target for the index by 400 points to 6,200, following similar actions by Goldman Sachs (GS+2.31%) and Yardeni Research.
“We had previously seen the U.S. equity market on a rocky path higher through year-end,” Lori Calvasina and other RBC strategists wrote in a note, per MarketWatch. A “pullback beyond the 10% drawdown that has already been sustained” isn’t inevitable, but the “path for stocks between now and December has gotten rockier with stronger headwinds.”
Markets slipped into a correction last week, a sign of lost momentum as the Trump administration levied and delayed tariffs on the U.S.’ closest trade partners. The S&P 500 fell to 5,507 on Thursday, but gained on Friday and was little changed on Monday morning — it was around 5,639 as of 11:46 a.m. New York time.
RBC’s strategists said the market is “at a fork in the road.” They’re watching everything from quarterly earnings to President Trump’s falling approval rating. Among several models, their lowest year-end forecast — 5,682 — is based on the GDP outlook, while their highest — 6,520 — factors in typical annual returns when Republicans have unified legislative and executive control.
RBC did not immediately respond to a request for additional information regarding the report.