Goldman Sachs Just Tipped the First Domino… Only One Superhero Can Save Us Now

Well, well, well… If it isn’t Goldman Sachs being the first to blink in this high-stakes staring contest. Late last night, as legend has it, their chief US equity strategist, David Kostin, looked at the S&P 500, sighed deeply, and muttered, “Yeah, this thing’s probably going down.” (Some say you can still hear the faint sound of margin calls echoing through lower Manhattan.)

In other words, Goldman just cut its year-end S&P 500 target from 6,500 to 6,200, essentially waving a giant red flag that recession fears are creeping into Wall Street’s psyche… and camping out there rent-free. We all knew this day was coming eventually… what with slower GDP growth, the weight of tariffs, and the rising tide of uncertainty that has the market trembling like a freshman giving a class presentation (sweaty palms and all).

The S&P 500 has already dropped nearly 10% from its recent high, flirting dangerously close to official “correction” territory. Goldman’s team is bracing for the impact of tariffs and slowing economic growth, which is why they just trimmed their 2025 S&P 500 earnings estimate to $262 per share, down from $268. Not exactly jumping out of a plane, but enough to send a message. And then there’s the real story… they cut their assumed price-to-earnings multiple from 21.5x to 20.6x, meaning they believe investors won’t be willing to pay as much for stocks moving forward. If you were looking for a billboard that sentiment has shifted, this is it.

To no one’s surprise, a major part of Goldman’s decision comes from fresh tariff risks and a weaker economic outlook. Their economists just downgraded their 2025 GDP growth forecast to 1.7% from 2.2%. When GDP slows, corporate earnings follow. It doesn’t help that every five-percentage-point tariff increase shaves off 1% to 2% of S&P 500 earnings. In short, higher tariffs mean lower profits, and lower profits mean a grumpy stock market. Throw in some good old-fashioned uncertainty (election-year chaos, global conflicts, and tech stocks finally losing steam) and you’ve got yourself a recipe for investors running to cash. Oh, and let’s not pretend like the market hasn’t been due for a correction… after back-to-back years of 20%+ gains, this is bound to happen sooner or later.

While it might seem like Goldman Sachs is singing the recession blues based on recency bias… RBC’s Lori Calvasina is here to make sure nobody gets too comfy. She warned that a 14% to 20% market decline could be on the table, which would shove us straight into bear market territory (just in case you thought your portfolio had suffered enough). Historically, the median S&P 500 decline during recessions is around 24% peak to trough. Right now, we’re only down 9%. If history repeats itself, this selloff could still be in its early innings.

Goldman isn’t exactly screaming “Great Depression incoming” (yet). They still see the S&P 500 climbing 11% from today’s levels by the end of the year, but that’s assuming something (literally anything) sparks optimism again. Maybe stronger economic data, maybe a shift in tariff policy, or maybe Jerome Powell swoops in with rate cuts like a reluctant superhero. Until then, expect more volatility, more panic, and more analysts awkwardly backtracking on their overly bullish calls (as if they didn’t just predict a new bull run last week).

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Stock.News does not have positions in companies mentioned.