‘A mood shift’: What Wall Street is saying following the S&P 500’s 10% decline

The S&P 500 (\GSPC) has fallen 10% from its all-time highs in February due to political instability and concerns about the market’s future.

“There’s been a sentiment shift,” Citi US equities analyst Scott Chronert told Yahoo Finance. “The sentiment and the client and investor focus has completely swung upside down versus where we started the year.” As we approached 2025, Wall Street consensus predicted that the US economy will continue to outperform the rest of the world’s share market. The prevalent market worry is that President Trump’s current economic policies, which include tariffs, federal job cutbacks, and stringent immigration, would further limit economic development. 

This has caused numerous economic research firms to drop their GDP predictions, some strategists to lower their year-end S&P 500 objectives, and equities worldwide to outperform the US market. Nonetheless, few see an overall downyear in US markets. Yardeni Research reduced its S&P 500 year-end prediction for 2025 from 7,000 to 6,400 in a letter to clients this week, representing a roughly 14% rise from current levels. Notably, the prediction did not include a prognosis for slower earnings growth this year. Instead, the Yardeni team is now predicting that the S&P 500 will not return to its record-high value set at the start of the year. 

To Wallerstein’s point, while economic forecasts have deteriorated, most economists and stock strategists do not see a recession. Some have even claimed that the market’s rating may be excessive because the S&P 500 has dropped off so much due to growth worries. Gargi Chaudhuri, BlackRock’s head investment and portfolio strategist for the Americas, told Yahoo Finance that her team remains “overweight US equities.” “We’re not worried about a recession yet,” Gargi Chaudhuri remarked. “So, if there were a fear about a recession, the debate would be slightly distinct now.

According to Carson Group chief markets strategist Ryan Detrick, 10% corrections are common and typically serve as the central event rather than extending to a bear market, which is defined as a 20% decline from an all-time high. According to Detrick’s research, the S&P 500 has undergone 48 adjustments since World War II. However, just 12 of those corrections have resulted in bear markets, implying that 75% of the time, a correction does not progress to a bear market. “We aren’t seeing a bear market coming,” Detrick told Yahoo Finance. “Being quick in the post-election year, choppiness is expected, and that’s somewhat occurring.”