Bram Berkowitz, The Motley Fool
5 min read
In This Article:
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Wall Street market strategists entered 2025 bullish, but many lowered their targets for the S&P 500 after Trump's tariff announcements.
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Wells Fargo's Christopher Harvey did not waver in the face of a potential trade war.
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Harvey still sees a bullish second half of the year with tariff uncertainty abating and other tailwinds resurfacing.
After the tariff drama began to unfold in late March and early April, most Wall Street strategists did not hesitate to lower their price targets for the benchmark S&P 500 (SNPINDEX: ^GSPC). After all, elevated tariff rates could increase inflation and slow the economy, potentially leading to a recession or some kind of stagflation scenario that would make the monetary tools at the Federal Reserve's disposal less effective.
But through the last month and a half, one of Wall Street's most bullish strategists coming into the year, Wells Fargo's Christopher Harvey, hasn't flinched. He hasn't once changed his roughly 7,000 price target for the S&P 500, which is now the highest among his peers. And he still thinks that price target is achievable this year. Here's why.
Heading into President Donald Trump's second term as president, some investors believed in an idea called the Trump put. During his first term, Trump regularly cited strong market performance, and investors didn't think Trump would do anything that would hurt the stock market. However, after the tariff announcements in early April, this theory went out the window as the S&P 500 fell as much as 21% from the all-time high it reached in February.
It seemed that Trump would do whatever it takes to reorder global trade and bring higher-paying manufacturing jobs back to the U.S. after decades of what he considered unfair treatment by other countries and their trade policies with the U.S.
However, Harvey told MarketWatch that he didn't think Trump would ultimately follow through on the elevated tariff rates, saying:
We felt the second half [of 2025] was always going to be much better. We thought that tariffs were a negotiating ploy, which turns out mainly to be true. We thought the underlying economy and the strength of the consumer, while not pristine or stellar, were still solid ...
So far, Harvey has called it right. Both the U.S. and China have temporarily lowered tariffs against one another's goods as they try and hammer out a broader deal. And it seems like the worst of the tariff negotiations is now in the past.
