In this unpredictable climate, the prevailing sentiment for our half-yearly prospects could be best summed up as ‘wait and see.’ The future, especially in Wall Street’s view, has never appeared more uncertain. Is it possible that the tariffs proposed by the Trump administration could trigger a return of inflation? Is there an impending recession awaiting the US economy? Has the US stock market genuinely left its earlier slump behind? The overarching response to these questions is that it remains to be seen.
In any forecasting endeavor, this is inevitably the universal feedback, particularly when it pertains to predicting the market’s trajectory. However, typically, one can discern a trend or favored outlook based on the available evidence. Yet, right now, the evidence is hanging indecisively, undergoing alterations virtually day by day. Jody Jonsson, a seasoned portfolio manager and vice chair of Capital Group, describes the current era as ‘intriguing.’
Jonsson, with nearly four decades of experience in the financial sector, notes that the present situation is unlike anything she has previously witnessed – a radical transformation in the global structure, spanning political, economic, and military domains. The resolution of all the ambiguities we are aware of in 2025 remains unclear. However, what is clear is that this period of uncertainty is likely to persist for a bit longer.
The recent performance of the broad US stock market suggests that it may have already bottomed out, ending April on an impressive rally. Still, substantial doubt persists on whether this surge is a consistent bullish trend. It seems that the market will continue to experience turbulence throughout much of the remaining year, buffeted by policy updates from the White House and corroborating or contradicting economic data, which will challenge recent pessimistic investor sentiment and confidence metrics.
Keith Lerner, Chief Market Strategist at Truist Wealth, acknowledges that ‘everyone longs for certainty.’ However, he states that we need to consider both the potential upsides and downsides in this environment and strategize our portfolio suitably for diverse consequences.
Ironically, even if the broader scenario unfolds positively – i.e., if the proposed tariffs are lowered through deal negotiations, and the Trump administration gravitates towards traditionally growth-encouraging tax cuts and deregulation policies – investors might find themselves finishing the year in a position strikingly similar to where they began.
In our inaugural outlook forecast this year, we had proposed a range of 6300 to 6600 for the S&P 500 index by year-end. Then, Wall Street strategists were revising their price targets upward at an alarming pace, and the mood in the financial district was ecstatic.
However, a sudden outburst over tariffs swiftly transformed an ordinary market correction into an almost bear-like episode in April, driving the S&P 500 down by nearly 19% from its peak (a 20% decline signals a bear market), which led Wall Street forecasters to adjust their estimates downwards.
The predicted final S&P 500 value by year-end varies widely among analysts, hovering between 5550 and 6600. We consider a more cautious range, such as 5800 to 6000, to be a safer bet. The midpoint of this range would suggest a nearly 6% upswing from the closing price of 5569 on April 30. (All prices, returns, and other data mentioned here are as of April 30, unless stated otherwise.)
This value, however, would still be approximately 4% lower than the market’s high in February and almost the same as the closing level in 2024. Hence, the dividends, with a recently noted annualised yield of 1.4% for stocks in the S&P 500, will become a crucial contributor to total returns.
Regardless of their political inclinations, investors have been reminded this year of the fact that markets despise uncertainty. The initial 100 days of President Trump’s term, which ended on April 30, brought ample evidence of this, resulting in the second-worst performance by a president since 1945, second only to Richard Nixon’s second term.
A continuous stream of executive decisions and federal workforce terminations, coupled with intermittent tariffs, significantly disturbed the financial markets. Therefore, market participants are left facing an ambiguous future, awaiting further clarity on economic and policy directions.
Thus, while the rollercoaster ride of the financial markets continues to inspire anxieties and questions, the prevailing strategy remains – wait and see. Conditions have never looked so opaque, but as always, time will reveal the ultimate trajectory of the fiscal world.