S&P 500 Slides Into Bear Market as Tariff Policies and Rate Stance Weigh on Outlook

The index has fallen over 20% from its peak, with analysts forecasting further declines driven by trade tensions and reduced corporate earnings expectations.

• The S&P 500 closed at 5,074 on Friday, officially entering a bear market after falling more than 20% from its record high in mid-2024.
• Morgan Stanley projects the index could drop to 4,700, reflecting a further 7%-8% decline, citing trade tariffs and the Federal Reserve's steady interest rate policy.
• Bank of America and Oppenheimer have lowered their year-end targets for the S&P 500 to 5,600 and 5,950, respectively, reflecting reduced corporate earnings expectations.
• Trade tensions with China and Canada are expected to erode U.S. corporate profitability, with Bank of America estimating a 9% earnings reduction from Chinese tariffs and an additional 1% from Canadian tariffs.
• Analysts highlight the role of potential policy shifts, including softened trade measures or monetary easing, in determining the market's trajectory and investor confidence.

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