Wall Street's Evercore ISI is the Latest Firm to Cut Its Target for the S&P 500

Following a dramatic two-day selloff that erased $5.4 trillion from the S&P 500 Index amid mounting concerns over President Donald Trump’s trade policies, Evercore ISI has joined other major Wall Street firms in acknowledging it had been overly optimistic in its 2025 stock market outlook. Despite scaling back expectations, the firm still sees potential for stocks to rise from current levels by the end of the year.

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Julian Emanuel, Evercore ISI’s chief equity and quantitative strategist, reduced his year-end target for the S&P 500 to 5,600 — about 10% higher than where the index closed on Friday at 5,074.

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This revision comes in response to market turmoil driven by Trump’s aggressive tariff moves, which unsettled global markets and triggered widespread investor anxiety. The lowered target is a notable shift from Emanuel’s previous projection of 6,800 for the S&P 500, which made him one of Wall Street’s most bullish voices over the past year.

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Alongside the reduced index target, Emanuel also revised his earnings-per-share (EPS) estimates for the index, cutting his 2025 projection to $255 and his 2026 estimate to $272.

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His adjustments reflect not only the recent market slide — which has pushed the S&P 500 down 17% from its February peak — but also the potential economic fallout from continued trade tensions.

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Evercore ISI isn’t alone in reassessing its outlook. Other firms, including RBC Capital Markets, Goldman Sachs, Barclays, and Yardeni Research, have also trimmed their forecasts. Each has cited rising uncertainty related to Trump’s tariff decisions and their broader implications for the global economy. The risk of a worldwide recession, they argue, is becoming increasingly difficult to ignore.

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In a note to clients, Emanuel explained that the extended period of uncertainty has increased market volatility, weakened investor confidence, and heightened the possibility that deteriorating sentiment could eventually impact real economic indicators — raising the risks of stagflation or even a full-blown recession.

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He acknowledged that while Trump’s negotiating tactics could still yield favorable outcomes, there is also a significant chance that they could backfire, leading to further retaliatory actions and escalation of the trade conflict.

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Some strategists have revised their outlooks multiple times within a matter of weeks, reflecting the speed at which investor sentiment has shifted since the U.S. presidential election. Optimism that Trump’s administration would drive a strong rally in equities has rapidly faded in light of more protectionist economic policies.

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Notably, Goldman Sachs’ David Kostin, RBC’s Lori Calvasina, and Ed Yardeni of Yardeni Research have all downgraded their S&P 500 forecasts twice in recent weeks.

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The latest round of lowered targets comes in the wake of Trump’s April 2 announcement of what he described as the steepest American tariffs in a century. These include a 10% blanket tariff on all imports to the U.S., with even steeper duties on exports from 60 countries — among them China, Vietnam, and several European Union members — aimed at addressing trade imbalances that he argues are unfairly skewed against the U.S.

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Federal Reserve Chair Jerome Powell acknowledged on Friday that the tariffs may have a larger-than-anticipated impact on the economy. He warned that the central bank could be forced to navigate the difficult task of controlling rising inflation while also protecting the labor market from a potential downturn. His remarks added to the already growing unease among investors and economists alike.

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Emanuel, in his note, described the Trump administration’s efforts as a chaotic attempt to unravel decades of established economic and geopolitical norms in a matter of months. “Trying to undo 80 years of economic, geopolitical, and domestic policy frameworks — the foundational elements established after World War II — in just 80 days is inherently messy,” he wrote.

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He likened the magnitude of Trump’s tariffs to the infamous Smoot-Hawley Tariff Act of the 1930s, which many historians blame for deepening the Great Depression. “Using a ‘sledgehammer’ like this was inevitably going to cause disarray,” he added.

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While the tone among strategists has clearly turned more cautious, the general consensus still points to some recovery in equity markets by year-end — albeit from a significantly lower base than previously expected.

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Whether that recovery materializes will depend largely on how the trade dispute evolves and how economic fundamentals hold up in the months ahead.

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