Analysts at Stifel warn that the current stock market euphoria may come to an end due to an impending economic slowdown. Thomas Carroll and Barry Bannister predict a sudden slowdown, potentially leading to stagflation, characterized by high inflation, unemployment, and stagnant economic growth.
The pair notes that while consumer spending is slowing down, artificial intelligence and tariff-related spending have helped mask these issues. However, they are uncomfortable with the S&P 500’s recent rally, particularly its 30% recovery from April 7’s low. They caution that valuation no longer matters until it does, citing historical examples like 1929, 1999, and 2021.
Stifel forecasts a potential 14% decline in the S&P 500 from its recent high, with a price target of 5,500. This represents a 6.5% decrease on the year, considered relatively low for the broad index by Wall Street. In response to this scenario, the analysts recommend investors overweight defensive sectors like Staples, Healthcare, and Utilities before a potential S&P 500 correction in late 2025.
Source: https://www.cnbc.com/2025/08/11/stock-market-party-to-be-ruined-by-sudden-economic-slowdown-says-stifel.html