The Morning Edge: Goldman Sachs Cuts S&P 500 2025 target; US Stocks Rebound on Cooler Inflation

Goldman Sachs has lowered its 2025-end target for the S&P 500 Index to 6,200, down from 6,500, pointing to heightened policy uncertainty—particularly around tariffs—and growing concerns about the economic growth outlook. The new target still implies a 10.6% gain from the index’s last close of 5,572.07, but the road ahead looks rocky. On Tuesday, the S&P 500 briefly teetered on the edge of a correction after President Donald Trump announced fresh tariffs in Canada, only to reverse course hours later, adding to market volatility.

According to Goldman Sachs analysts, the recent market decline has been fuelled by a surge in policy uncertainty, fears of slowing growth, and a significant unwind of hedge fund positions. The so-called "Magnificent 7" stocks, once market darlings, have been hit hard, with their share prices plunging 14% and their price-to-earnings ratio dropping from 30x to 26x. As investors navigate this turbulent landscape, the interplay between Thatrade policies, economic data, and corporate earnings will likely dictate the market’s next move. Stay tuned volatility is far from over.

Data
US consumer prices rose modestly in February, with the Consumer Price Index increasing by 0.2%, the smallest gain since October, according to the Labour Department’s Bureau of Labor Statistics. A 0.3% rise in shelter costs drove the overall CPI growth, nearly half of it, but a 4.0% drop in airline fares partly offset this due to weaker demand. The data provides the US Fed with room to hold interest rates steady next week, but the relief may be short-lived, as the report does not fully reflect the inflationary impact of President Donald Trump’s recent tariff escalations. Economists have already upgraded inflation forecasts amid surging consumer inflation expectations.

Markets
Overnight
US stocks edged higher on Wednesday as cooler-than-expected inflation data helped temper a recent selloff, though gains were capped by escalating trade tensions under President Trump’s multi-front tariff war. The S&P 500 and Nasdaq closed in positive territory, with the tech-heavy Nasdaq buoyed by strong performances from tech and momentum stocks. Intel surged 4.6% following reports that TSMC had approached Nvidia, AMD, and Broadcom about a potential joint venture to operate its factories, while PepsiCo fell 2.7% after a Jefferies downgrade. However, uncertainties persisted as lawmakers on Capitol Hill struggled to agree on a stopgap spending bill to avert a government shutdown, adding to the market’s cautious tone.

US Treasury yields climbed on Wednesday as cooler February inflation data provided some relief but was offset by lingering uncertainty over Trump’s tariff policies and their potential impact on inflation and global growth. The yield on the benchmark 10-year note rose 2.8 basis points to 4.316%, while the 30-year bond yield increased 3.2 basis points to 4.6355%. The two-year yield jumped 5 basis points to 3.991%. Amid mounting concerns about a potential recession and global trade war, the yield spreads between corporate bonds and US Treasuries widened to their highest level since September, reflecting heightened risk aversion. Investors remain cautious as they weigh the implications of inflation trends against the economic risks posed by escalating trade tensions. 

The US dollar saw a mixed performance, caught between easing inflation and fears that tariffs could drive it higher in the future. The euro slipped 0.25% to $1.0891, while the dollar gained 0.38% against the Japanese yen, reaching 148.33. Meanwhile, the Canadian dollar strengthened 0.45% to C$1.44 per US dollar, and the greenback edged down 0.08% against the Swiss franc to 0.882. The dollar’s uneven movements reflect the market’s struggle to balance inflation trends with the potential economic fallout from escalating trade tensions.

Brent crude oil prices rose on Wednesday as US government data revealed lower-than-expected oil and fuel inventories, signalling tighter supply. Brent crude gained 2% to close at $70.95. Despite the gains, investors remain cautious amid mounting fears of a US economic slowdown and the impact of tariffs on global growth, which could weigh on future demand.

Day’s Ledger
Economy

• Eurozone industrial production data
• IEA monthly report
• US February PPI data
• US  weekly initial jobless claims data.

Companies

•  Angel One board to consider dividend
• Gensol Engineering board to consider fundraising plans and stock split 
• IIFL Finance board to discuss fundraising plans
• Kolte - Patil Developers board to discuss fundraising plans

Policy

• ECB's De Guindos speaks
• G7 foreign ministers' meeting

Tickers

• BEML has signed a non-binding Memorandum of Understanding (MoU) with Siemens India to jointly explore opportunities in the semi-high-speed and suburban passenger train segments.
• Bharat Electronics has signed a contract with the Ministry of Defence, valued at ₹24.63 billion, for the supply and servicing of Ashwini radars for the Indian Air Force.
• Coromandel International will acquire a 53% stake in NACL Industries for ₹8.20 billion from its current promoter, KLR Products.
• Jaiprakash Associates has announced that a consortium of lenders has transferred its outstanding debt and financial assets to the National Asset Reconstruction Company (NARCL).
• Jubilant Pharmova’s subsidiary, Jubilant Cadista Pharmaceuticals Inc., has received an Establishment Inspection Report (EIR) with Voluntary Action Indicated (VAI) status from the USFDA for its solid oral formulations facility in Salisbury.
• NHPC's board will meet on March 19 to consider the borrowing plan for raising debt for the financial year 2025-26.
• NTPC Green Energy has successfully commissioned the second and final phase of the 50 MW capacity out of the 105 MW Shajapur solar project (Unit-1), developed by its subsidiary, NTPC Renewable Energy.
• Ola Electric Mobility has announced Holi flash sale offers for its S1 range of electric scooters.
• Zydus Lifesciences’ venture capital arm has announced its investment in the biopharmaceutical company Illexcor Therapeutics.

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