American Invest Hub
  • Politics
  • Investing
  • Business
  • Latest News

American Invest Hub

  • Politics
  • Investing
  • Business
  • Latest News
Business

Risk alert: ‘mild recession’ could crash the S&P 500 to 3,700 level

by admin April 27, 2025
April 27, 2025
Risk alert: ‘mild recession’ could crash the S&P 500 to 3,700 level

The benchmark S&P 500 index has recovered nearly 10% in recent weeks after President Trump agreed to a 90-day pause on almost all tariffs other than the ones imposed on China.

Additionally, the White House exempted electronic devices from aggressive tariffs as well.

Still, if the US economy slides into a recession, as many believe it would by the end of this year, the benchmark index could crash to a low of 3,700, according to a senior analyst at Wolfe Research.

The firm’s forecast translates to about a 33% decline in SPX from current levels.

Why is Wolfe super bearish on the S&P 500 index

Wolfe analyst Chris Senyek warns of a sharp downside in the S&P 500 index even if the US sees a “mild” recession in the back half of 2025.

According to Senyek, Trump’s steep tariffs and the subsequent retaliation from other nations could result in a significant hit to corporate earnings this year.

Consequently, the benchmark’s EPS estimates will come down by as much as 15% from the current $266, “in line with the median EPS peak to trough over the past four recessions, of 16.7%,” he told clients in a research note this week.

Note that SPX is already down some 10% versus its year-to-date high in February.

Q1 earnings season has so far been encouraging

A material uncertainty-driven hit to corporate earnings could translate to multiple contractions in 2025.

“If we apply the 15Y average price-to-earnings (P/E) of 16.6x to recessionary type EPS of $225, this implies about a 3,700 level for the S&P 500 in a mild recession,” Senyek added in his report.

That said, the first-quarter earnings season has kicked off on a positive note.

Nearly 160 S&P 500 companies have reported so far, of which 76% have come in ahead of expectations.

Plus, the blended growth rate currently sits at 8%, meaningfully above the 7.2% that experts had forecast at the end of the calendar Q1.

SPX has recently formed a death cross

Investors should note that Senyek’s forecast assumes a mild recession only.

If a severe one hits the economy instead, the ramifications for the benchmark index could be even more dire.

Even in the near term, the S&P 500 stands to relinquish its recent gains as the dreaded “death cross” has recently appeared on its daily chart.

A death cross is when an asset’s 50-day moving average (MA) falls below its longer-term 200-day moving average, and it often indicates bearish momentum ahead.

However, not everyone on Wall Street is as dovish on the SPX as Wolfe Research.

Oppenheimer, for example, continues to see upside in the benchmark index to the 5,950 level, which indicates potential for another 10% gain from current levels.

The post Risk alert: ‘mild recession’ could crash the S&P 500 to 3,700 level appeared first on Invezz

0
FacebookTwitterGoogle +Pinterest
previous post
Want to be able to invest like Warren Buffett? VistaShares just launched an ETF for you
next post
Booking, Airbnb, and Expedia stocks forecasts ahead of earnings

Related Posts

Canoo stock collapses, these EV companies could be...

January 22, 2025

S&P 500 climbs for best day since early...

July 24, 2024

GLD ETF forecast as gold price forms a...

January 3, 2025

Trump tariffs, tax cuts and interest rates likely...

May 3, 2024

What CoreWeave IPO means for Goldman Sachs

March 31, 2025

Celsius bets on women consumers—will its stock soar?

April 1, 2025

Trump Media (DJT) grants stock to FBI nominee...

February 1, 2025

JEPI ETF stock scorecard for 2024 and what...

December 17, 2024

Bissell recalls 3.2 million handheld steam cleaners after...

July 24, 2024

Could flying abroad be cheaper than a Disney...

February 12, 2025

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Latest News

    • Interview: Strategic location gives Brazil Potash cost advantage in domestic fertiliser market, says CEO Matt Simpson

      June 1, 2025
    • Canada’s Q1 GDP expands by 2.2%, driven by exports spike ahead of potential US tariffs

      June 1, 2025
    • President Trump to host farewell for Elon Musk as DOGE leader steps away

      June 1, 2025
    • UK’s digital banks face divergent fortunes: Starling stumbles, Monzo and Revolut soars

      June 1, 2025
    • Trump wants Apple to shift iPhone production from India to the US: here’s what it means

      May 18, 2025

    Categories

    • Business (3,054)
    • Investing (2,476)
    • Latest News (1,994)
    • Politics (1,530)
    • About us
    • Contact us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: americaninvesthub.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 americaninvesthub.com | All Rights Reserved