S&P 500 in 2025: Wall Street's Stunning Shift From Optimism to Sideways Trading

The market’s mood swing has been dramatic. Back in December, Wall Street banks pegged the S&P 500’s year-end target at 6,600—suggesting serious upside potential. Fast forward to now, and that consensus has cratered to 5,900, implying essentially zero movement from current levels. We’re talking about a 700-point downward revision across the sell-side in just five months.

Why the abrupt 180?

Tariffs are the culprit. Trump’s trade policies have pushed the effective U.S. import tariff rate to 14.4%—the highest since 1939 and six times higher than when he took office. JPMorgan’s strategists flagged it bluntly: Q1 GDP growth got dragged down 0.3% annualized due to tariff-driven import spikes.

The ripple effects are real:

• Earnings estimates got hammered: January called for 14% S&P 500 earnings growth in 2025. Current consensus? 8.5%. That’s a massive reset.
• Recession odds doubled: Wall Street Journal’s latest economist survey puts 12-month recession probability at 45%, up from 22% in January.
• Consumer confidence collapsed: University of Michigan data shows May sentiment hit the second-lowest level on record, while inflation expectations spiked to 1981 levels.

What Wall Street actually expects

Among 17 major institutions tracked, the median year-end target sits at 5,900—just 1% downside from 5,945. Translation: the market is expected to basically tread water through year-end, neither crashing nor soaring.

But here’s the catch: that forecast is hostage to policy clarity. As JPMorgan CEO Jamie Dimon warned, tariffs will lift consumer prices and throttle growth. Hedge fund titan Bill Ackman went further, calling the policies an “economic nuclear winter.”

The volatility trap

Even if sideways is the consensus, expect wild swings. Critical economic data drops in the next week:

• Q1 GDP revision (May 29)
• PCE inflation print (May 30)
• Job openings and payroll reports (June 3 & 6)

Each release could send stocks into a tailspin. Investors betting on calm waters may get whipsawed instead.