On Tuesday, HSBC became the latest major international institution to adjust its outlook for the S&P 500 Index till the year-end. The London-based bank reduced its price target from 6,700 to 5,600, citing a slowing US economy, trade uncertainties, and erratic monetary policy.
The revised forecast is in line with the views of BofA analysts and highlights a growing pessimism among global brokers. The benchmark index is already down 6% year-to-date, with experts warning of the potential for increased volatility amid recession and stagflation fears. Such a scenario seems more likely if US interest rates remain elevated, especially given the ongoing tariff threats related to Donald Trump's trade policies.
However, HSBC's baseline scenario is neither recession nor stagflation. The bank forecasts US GDP growth of just 1% in 2025, with a potential Federal Reserve rate cut as early as June.
In light of the heightened uncertainty, experts advise investors to minimize risks by favoring safe-haven assets, such as large-cap stocks with reliable dividends and securities that can withstand the pressures of a volatile market.