Wall Street Sees Market Strength Ahead Despite Tariff Pressures

Despite renewed concerns over US trade policy, two of Wall Street’s largest financial institutions — Goldman Sachs and Bank of America (BofA) — are expressing confidence in the stock market’s ability to thrive, Axios reports.

Though their outlooks on the broader economy differ, both banks agree on one thing: tariffs are not a reason to pull back from equities.

Bank of America anticipates a stagflationary environment through the remainder of 2025 — marked by stubborn inflation alongside slowing economic growth. Even so, the bank points out that during similar periods in the 1970s, certain sectors, especially large-cap value stocks, outperformed. As a result, BofA favors a portfolio strategy focused on dividend-paying companies, value over growth, and stocks over bonds.

Meanwhile, Goldman Sachs projects a more optimistic scenario. The firm expects steady economic growth and moderating inflation, which could give the Federal Reserve room to cut interest rates earlier and more aggressively than previously anticipated. Goldman’s investment strategy includes a balanced sector allocation, with an emphasis on AI-driven software and services, alternative asset managers, and companies well-positioned to benefit from falling bond yields.

Despite their differing macroeconomic views, both firms have raised their year-end targets for the S&P 500. Goldman forecasts a 6,600 level, while BofA sees a slightly more conservative 6,300. In both cases, analysts underscore the durability of US corporations even amid policy uncertainty, including the recent announcement of new tariffs on copper and pharmaceuticals by President Donald Trump.

“No recession, equity prices rally, that is our baseline,” said Goldman Sachs’ David Kostin.
“I do not want to be short equities in this environment,”echoed BofA’s Savita Subramanian, noting that “the US isn’t exceptional, but Corporate America might be.”

Both banks downplay the long-term impact of tariffs on stock performance. While new duties may pose cost pressures for some industries, analysts argue that large, resilient companies are well-equipped to manage trade-related disruptions. Corporate adaptability, pricing power, and global diversification continue to be seen as strong buffers.