One of Wall Street’s biggest bulls cuts his S&P 500 outlook, blaming Trump’s tariffs

Widely followed strategist Ed Yardeni, one of the biggest bulls on Wall Street, lowered his market forecast, saying President Donald Trump’s tariffs raise the risk of stagflation.

“It has dawned on Wall Street (and us!) that President Trump’s tariffs aren’t negotiating chips to help the U.S. lower tariffs around the world, promoting free trade,” Yardeni said in a note to clients Thursday. “They’re trade barriers, triggering other countries to respond in kind, and they jeopardize U.S. inflation and economic growth.”

Yardeni Research lowered its best-case S&P 500 target for 2025 by almost 9%, to 6,400 from 7,000, and set its worst-case target at 5,800. The new best-case target of 6,400 would still represent a more than 10% gain for the equity benchmark from Wednesday’s close.

Trump’s aggressive tariff charges on imports into the U.S. and sudden changes in policy have stirred up volatility on Wall Street since his inauguration in January, stoking fears of dampened consumer spending, slower economic growth, weaker profits and even a recession. The S&P 500 has fallen about 9% from its recent peak, teetering near correction territory.

On Thursday, investors grappled with a fresh threat from the White House to impose 200% tariffs on all alcoholic products coming from the 27-nation European Union in retaliation for the bloc’s 50% tariff on American whiskey.

Yardeni said U.S. trade policy is disorganized. “We can’t ignore the potential stagflationary impact of the policies that Trump 2.0 is currently implementing haphazardly.”

“In response to the now heightened risk of stagflation, we are lowering our S&P 500 valuation expectations and year-end price targets,” Yardeni said. “If tariffs stick, the one-time price increase and uncertainty regarding its impact on inflation expectations are likely to be enough to keep the FOMC on pause,” he said, referring to the policy-setting Federal Open Market Committee of the U.S. Federal Reserve.

Goldman Sachs this week became the first major sell-side bank on Wall Street to slash its S&P 500 target, lowering its objective to 6,200 from 6,500.