Investing.com -- Bhanu Baweja, the chief strategist at UBS Investment Bank, said today that the S&P 500 could contract another 8% due to the "visibly tiring" U.S. consumer.
According to Bloomberg, Baweja believes that the weakening consumer sentiment will exert additional pressure on risky assets.
Baweja pointed out that several key indicators, including employment expectations, spending outlook, and consumer confidence, are all signaling potential risks.
He anticipates the S&P 500 could drop to as low as 5,300 points as profit estimates for the next three to four months are revised downwards by analysts.
Despite the S&P 500 rebounding to a two-week high recently, concerns persist regarding the economic repercussions of impending U.S. tariffs, which are scheduled to be implemented on April 2.
U.S. equity futures are weaker in premarket trade as investors continue to be cautious about President Donald Trump’s unpredictable trade policy and unclear exemptions.
The slowing U.S. economy, which would have been dismissed as a joke three months ago, is now a reality, he said. Baweja pointed out that the data is reflecting the effects of reduced immigration and the absence of additional fiscal stimuli.
Analysts’ projections for S&P 500 earnings in 2025 have been adjusted downwards to a 9.5% increase, compared with the 12.5% growth projected at the beginning of the year, according to data compiled by Bloomberg Intelligence.
One of the key reasons behind Baweja’s latest forecast for the S&P 600 is that these earnings estimates are likely to be further reduced.