The stock market outlook has improved, but only slightly, according to RBC Capital Markets. Head of U.S. equity strategy Lori Calvasina raised her year-end S & P 500 price target to 5,730 from 5,550 . That, however, still implies a decline of 3% from Friday’s close. “Our new price target reflects our belief that the stock market is on a slightly better path than the one it was on in early April, when we cut our target for the second time this year, but not back to where it was in January or mid March,” Calvasina wrote in a note to clients. Rising global trade tensions have left investors on edge in recent months. A swath of U.S. tariffs on imported goods dented investor confidence to start April. .SPX bar 2025-04-01 S & P 500 since April But a series of pauses and temporary reductions on those levies helped the market bounce back. Through Friday’s close, the S & P 500 was only 3.8% below its all-time high set in February. The benchmark at one point was around 20% below that level. “The index has recouped most of that loss, which is telling us that the market never became convinced recession is at hand and believes a meaningful policy pivot has occurred on tariffs,” Calvasina said. “Overall, both our valuation and EPS models bake in for the base case inflation in the upper 2% range, 3 Fed cuts starting in September, real GDP of 1.3% for the full year, margin contraction (more significant in the back half of the year than in 2Q), and some relief on interest expense driven in part by several cuts from the Fed starting in September,” she added. “This is a better macro backdrop than the more severe stagflation scenario that we baked into our numbers back in early April, but is not as strong as the one we were baking in back in January.” Calvasina also highlighted higher Treasury yields as a potential risk to the market going forward. She noted that a meaningful move above 5% in the benchmark 10-year note yield would pressure equities.
