Is the party over?

Wall Street giants are putting away their champagne and taking a far more sobering tone than they were when the new year began.

Back in January, everyone was celebrating yet another victorious bull market. But the tables have turned: $4 trillion in market value has been wiped out in a tariff-induced panic over the last few days, and on Monday, the S&P 500 closed below its 200-day moving average for the first time since October 2023.

Now, it’s not just retail investors and hedge funds who are souring on the market—big banks are cutting their 2025 forecasts for the S&P 500 in droves.

• Citigroup reiterated its price target, but delivered a different kind of blow: It downgraded US stocks from “overweight” to merely “neutral,” citing a decline in “US exceptionalism” in the context of tariffs and a broader economic slowdown.
• JPMorgan also doubled down on its end-of-year S&P 500 price target, but warned it could take longer to reach than analysts originally expected.
• Goldman Sachs was the first major bank to walk the walk and actually slash its price target, cutting it from 6,500 to 6,200, pointing to slowing GDP growth forecasts and general looming question marks about the economy’s health.
• HSBC also soured on US equities, downgrading US stocks to “neutral” while upgrading European stocks due to tariffs and the realignment of the global economy. “Prevailing uncertainty around tariffs could see US equity remain challenged in the next few weeks, but we are hesitant to turn too cautious on the medium term outlook,” global equity strategist Alastair Pinder wrote.
• BCA Research has a particularly negative outlook, downgrading equities all the way to underweight, arguing that tariffs and government cuts from DOGE will cause the economy to nosedive into a recession.

The bulls aren’t extinct yet

While major banks getting undeniably nervous certainly isn’t reassuring news, these same Street players are generally still bullish in the long term.

Even analysts who downgraded US equities such as those from HSBC and Citi argued that they still expect corporate earnings to be strong and that stocks will recover from here.

“We are not convinced that US exceptionalism, when seen during the equity lens, is over,” wrote Citigroup strategist Dirk Willer.

But if the party isn’t quite over yet, it’s certainly lost its spirit.—LB