What Wall Street is saying after the S&P 500’s 10% tumble

The S&P 500 (^GSPC) has entered correction, falling 10% from its February all-time highs as political uncertainty has driven fears over the market outlook.

“There’s been a sentiment shift,” Citi US equity strategist Scott Chronert told Yahoo Finance. “The sentiment and the client and investor focus has completely swung upside down versus where we started the year.”

Entering 2025, the consensus on Wall Street called for the US economy to grow at a healthy pace and lead continued outperformance of the US equity market against the rest of the world. Now, the prevailing market fear is that President Trump’s current economic policies — namely tariffs, federal job cuts, and strict immigration — could further slow economic growth. This has prompted several economic research teams to lower their GDP forecasts, some strategists to cut their year-end S&P 500 targets, and stocks around the rest of the world to outperform the US market.

Still, few are calling for an overall lackluster year in US stocks. In a note to clients this week, Yardeni Research cut its 2025 year-end S&P 500 target from 7,000 to 6,400, which represents a roughly 14% increase from current levels. Notably, the forecast didn’t come with a projection for lower earnings growth this year. Instead, the Yardeni team is now just assuming the S&P 500 won’t return its record-high valuation seen entering the year.

“We still think earnings growth is going to be good,” Yardeni Research chief markets strategist Eric Wallerstein told Yahoo Finance. “There hasn’t been a lot that’s actually fundamentally changed about the economy. It’s more so just uncertainty is weighing on [valuation] multiples.”

Read more: What is a recession, and how does it impact you?

To Wallerstein’s point, while views on the economic outlook have soured, most economists and equity strategists aren’t actually calling for a recession. And some have even argued that since the S&P 500 has sold off so far on the growth concerns, the market’s rerating may be overdone. BlackRock’s chief investment and portfolio strategist for the Americas Gargi Chaudhuri told Yahoo Finance her team remains “overweight US equities.”

“We’re not really worried about a recession yet,” Gargi Chaudhuri said. “So if there was a concern around recession, the conversation that we would be having would be a little bit different right now. This is just a pullback from some of the price to perfection that we had in the beginning of the year coming into this year, and this is a healthy pullback.”