Raymond James lower its S&P 500 (SP500) earnings-per-share estimate for 2025 from $270 to $250$255, citing softer financial exercise and muted company spending, but left its year-end index goal of 5,800 intact, primarily based on a gentle GDP progress outlook.

The companies’ Chief Funding Officer, Larry Adam, factors to a landmark U.S.-China deal that slashes American tariffs on Chinese language imports from 145% to 30% and Chinese language duties on U.S. items from 125% to 10% for 90 days, reopening provide traces and easing fears of acute shortages. Markets cheered the tariff reprieve: the S&P 500 rallied roughly 3% off its current lows after the announcement.

Regardless of the tariff truce’s reduction, Adam cautions that fairness valuations are already stretched, leaving restricted runway for a number of growth and not using a stronger earnings backdrop. He calls the outlook cautious optimism, noting that whereas draw back dangers have receded, upside drivers stay scarce absent an surprising enhance to company earnings.

Why it issues: A decrease EPS vary underscores the tug-of-war between coverage catalysts and real-world financial headwinds, forcing buyers to mood return expectations at the same time as commerce tensions ebb.

Buyers will deal with Q2 earnings and Fed commentary for clues on whether or not this tariff window can maintain progress and revive revenue momentum.

This text first appeared on GuruFocus.