Strategists Warn of Potential 5% Drop Amid Growth Concerns
Wall Street strategists are raising alarms about rising stock market volatility, with Morgan Stanley’s Michael Wilson becoming the latest to warn of economic headwinds fueled by President Donald Trump’s trade policies.
Wilson, once a vocal bear on equities before shifting his stance in mid-2024, now predicts the S&P 500 (GSPC) could drop as much as 5% to 5,500 in the first half of 2025. His outlook is driven by slowing corporate earnings, Trump’s tariffs, and declining fiscal spending. The index closed Friday at 5,770, having already slipped about 2% this year.
Other analysts, including those at JPMorgan Chase and RBC Capital Markets, have also tempered their bullish projections as concerns mount over trade policy uncertainty, sticky inflation, and the Federal Reserve’s unclear path on rate cuts. The Nasdaq 100 recently entered correction territory, reflecting investors’ retreat from high-flying tech stocks that had fueled market gains over the past two years.
Despite the current unease, strategists have not yet revised their year-end targets. Wilson maintains that the S&P 500 could rebound to 6,500 by the end of 2025 but warns of a volatile journey ahead. He also cautions that in the event of a recession, the index could sink as much as 20%.
Meanwhile, bond traders are signaling increased recession risks, with investors flocking to short-term Treasuries. The two-year yield has dropped sharply on expectations that the Fed may cut rates as early as June to cushion the economy.
While market uncertainty remains high, some strategists, including Nomura’s Charlie McElligott, believe the recent declines have been controlled, reducing the likelihood of a market meltdown in the near term.
You might like this article:Walgreens Goes Private in $10 Billion Sycamore Deal Amid Retail Pharmacy Struggles
