Goldman Sachs also updated its S&P 500 price target.
Analysts and researchers at J.P. Morgan (NYSE:JPM) recently released their mid-year outlook, and their expectation for stocks remains cautious, despite the recent surge.
In fact, JP Morgan analysts see the S&P 500 ending the year at 6,000, which would be down about 3.7% from the current level of 6,231.
Currently, the large cap index is up about 6% year-to-date. So, if the S&P 500 did drop to 6,000 by year’s end, it would finish the year up about 2%.
The mid-year outlook is more bearish than the view that firm had at the beginning of the year, when it projected the S&P 500 to end 2025 at 6,500.
In contrast, JP Morgan is more bullish on international stocks. Specifically, it anticipates that the MSCI Eurozone index will end the year at 345, up 9%, while the FTSE 100 will hit 9,000 – a 3% gain. Further, the Tokyo Stock Price Index is projected to rise 8%, while the MSCI EM is targeted to rise 3%.
Recession still in play
While JP Morgan researchers anticipate double-digit corporate earnings growth, there are still uncertainties around the economy, particularly tariffs.
“The economy and consumers have shown resilience, and corporates delivered healthy pre-Liberation Day growth of 12% despite the implied aggregate tariff rate surpassing 20%,” Dubravko Lakos-Bujas, head of Global Markets Strategy at JP Morgan, said. “But although positioning should be a support for equities in the short term, we remain open to the economy slowing in the second half of this year at a time when valuation is less supportive. With sluggish growth and a higher-for-longer rate environment, the market will likely follow a similar playbook to that of 2023–2024, characterized by narrow market leadership and high concentration.”
JP Morgan economists at the firm still believe there is a 40% chance that the economy goes into recession in the second half.
“A 40% recession probability is not insignificant,” said Mislav Matejka, head of European & International Equity Strategy at JP Morgan. “We are looking for weaker activity over the next few months, but also higher inflation prints in the U.S., which could squeeze purchasing power. Even with dramatic backpedaling, the current tariff picture is worse than most thought at the start of the year. Now, investors have likely been surprised by the strength of the equity rebound over the past two months, but these considerations need to be digested.”
Goldman Sachs is more bullish
Earlier this week, Goldman Sachs updated its outlook for the next 12 months for the S&P 500 – and it was far more bullish than JP Morgan.
Goldman Sachs analysts, in a research note, called for the S&P 500 to end 2025 at 6,600. That is up from a previous estimate of 6,100. That would be up another 6% from now until the year of the year. For the full year, if the S&P 500 finished at 6,600, the S&P 500 would end the year with a 12% return.
Over the next 12 months, through the second quarter of 2026, Goldman Sachs anticipates the S&P 500 to hit 6,900, which would be about 11% higher.
“Recent inflation data and corporate surveys indicate less tariff pass-through so far than we expected,” the analysts said, reported Reuters. “However, we expect the digestion of tariffs to be a gradual process, and large-cap companies appear to have some buffer from inventories ahead of the increase in tariff rates.”
Analysts also anticipate 7% earnings per share growth for the S&P 500 this year and next year, but they will reassess after Q2 earnings come out. Further, they expect the S&P 500’s valuation to rise slightly.
“Earlier and deeper Fed easing and lower bond yields than we previously expected, continued fundamental strength of the largest stocks, and investors’ willingness to look through likely near-term earnings weakness support our revised S&P 500 forward P/E forecast of 22 times from 20.4 times,” analysts said, reported Reuters.
The current forward P/E ratio of the S&P 500 is about 21.
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