S&P 500 index may drop even further — BCA Research

Peter Berezin, chief strategist at BCA Research, warns that the S&P 500 index could extend its decline, pressured by record-high tariffs and a slowing US economy. The current level of tariff barriers remains the highest since the 1930s, undermining consumer and business confidence, even with delayed reciprocal duties, he notes.

However, the expert believes that markets are not fully taking into account the probability of a recession in the US. The projected EPS growth of 12% for next year appears overly optimistic, given declining real incomes and lower consumer activity, Berezin says. In the face of deteriorating economic indicators such as reduced retail sales and rising loan delinquencies, BCA Research maintains its forecast at 4,450 points with the potential to drop to 4,200 points by the year-end.

The strategist recommends investors to focus on stocks of companies in the consumer staples and healthcare sectors. At the same time, they should refrain from investing in sectors that are highly dependent on the phases of the economic cycle, such as the automotive and construction industries.