UBS strategist Bhanu Baweja has issued a stark warning for equity markets, forecasting that the S&P 500 could drop to 5,300 points—an 8% fall from current levels. While that might seem surprising given the index’s strong performance in recent months, Baweja believes the market is underestimating growing headwinds from the real economy.
At the core of his concerns is what he calls a “visibly tiring” U.S. consumer. With signs of stress emerging across spending behaviour, employment expectations, and confidence levels, Baweja argues that consumer-driven growth is starting to lose steam.
The warning comes at a time when analysts are already downgrading earnings expectations. Forecasts for 2025 S&P 500 earnings growth have been cut from 12.5% to 9.5%, and Baweja believes further reductions are likely as economic data softens.
Adding to the market’s unease are potential new tariffs slated for April 2 and lingering uncertainty around Trump’s trade policy. Baweja also points to broader structural issues—such as slowing economic momentum, reduced immigration flows, and the absence of fresh fiscal support—as reasons to brace for a more cautious outlook.
Taken together, Baweja’s call for the S&P 500 to fall to 5,300 underscores a growing divide between bullish sentiment in markets and weakening fundamentals on the ground.
Huh. I dunno. This is a weekly candle chart, a fall to 5300 would not strike me as such a big deal given the extent of the rally. Sure, investors/holders wouldn’t be happy.
But the trading opportunities … oh my!
Anyway … when? Perhaps the next freak out is due heading into April OPEX? Pencil in the days leading up to April 18.
Oh, and don’t forget April 2!
This article was written by Eamonn Sheridan at www.forexlive.com.