UBS slashes S&P 500 year-end target to 6,400, lowers EPS estimate over dim economic outlook amid US tariffs

UBS Global Wealth Management cut the S&P 500's 2025 target to below the 6,500 mark, widely mirroring actions from other Wall Street firms including Barclays and Goldman Sachs, due to the economic impact of US trade tariffs. The wealth management unit of European bank UBS, cut its year-end index target to 6,400 from 6,600 even as it holds an ‘attractive’ view on US equities.

UBS also lowered its 2025 earnings per share (EPS) estimate for the S&P 500 to $265 from $270. "It seems likely that the policy uncertainty shock will lead to further weakness in economic and corporate profit readings in the next several weeks. This could lead to continued volatility in US equity markets in the short term," UBS Global Wealth Management strategists said in a note this week.

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UBS on US stock market

US President Donald Trump has put a raft of tariffs on its key trading partners, the latest being a 25 per cent levy on auto imports that has unsettled global financial markets. The benchmark index has fallen over four per cent this year including Friday's losses, having entered correction territory in March.

UBS hopes for US equities to reverse course and rise by the end of the year, driven by policy clarity, durable economic growth and investment in artificial intelligence (AI). The brokerage's index target is 12 per cent higher than the last close of 5,693.31. UBS sees information technology as the 'most attractive' among sectors, betting on AI investments.

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Goldman Sachs cuts year-end S&P 500 target

Earlier this month, Goldman Sachs cut their S&P 500 index targets due to uncertainty from tariffs. Goldman Sachs is becoming more cautious about US credit and equity markets. It sounded the alarm amid concerns of the escalating trade war battering the world's largest economy.

For equities, a team led by Goldman Sachs's David Kostin cut their year-end S&P 500 target to 6,200 points from 6,500, citing a dimmer outlook for economic growth and reflecting the slump for the Magnificent Seven group of stocks.

Goldman Sachs strategists raised their forecasts for US credit spreads, citing tariff risks and signs that the US government is willing to tolerate short-term economic weakness. They also raised European earnings estimates and expect the region’s credit spreads to show more resilience than the US's.

The strategists expect spreads for US high-yield debt to reach 440 basis points in the third quarter versus an earlier projection of 295 basis points. Junk-bond spreads are a good indicator of perceptions about the economy, with speculative-grade companies seen as less likely to default if the growth outlook is good. Investors are willing to accept a lower premium for the debt.

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