Trump's Tariffs Weigh on Stock Market Outlook
Goldman Sachs warns that President Donald Trump's tariff plan could lead to a significant market decline.
Key Findings:
* S&P 500 index projected to drop 5% in the near term.
* Each 5% increase in tariff rate could reduce S&P 500 earnings by 1%-2%.
* Tariffs may squeeze profit margins or reduce sales volume.
Corporate Impacts:
* Earnings per share for S&P 500 companies could decrease by 2%-3%.
* Companies may face higher input costs or pass on expenses to consumers.
Market Uncertainty:
* US Economic Policy Uncertainty Index at a 40-year high.
* Volatility in the market as investors gauge the impact of tariffs.
Inflationary Pressures:
* Tariffs may stoke inflation, potentially increasing interest rates.
* Short-term rise in yields anticipated, but long-term growth expectations may limit major increases.
Goldman's Outlook:
* S&P 500 fair value could decline 5% in the short term.
* Further tariff escalations could exacerbate market declines.
* Goldman predicts S&P 500 to reach 6,500 by end of 2024, implying a 7% upside.