Tariffs continue to be top of mind for investors along with recent weaker-than-expected macroeconomic data. The US equity market has rotated towards more defensive-oriented stocks, and there is opportunity in companies that are insensitive to the ongoing developments. Our models suggest that if tariffs were to potentially increase by 5 percentage points to 8%, it could reduce our S&P 500 earnings estimates by 1-2%.
Portfolio managers are focused on prospects for the continued growth of the US economy. To see a significant rally in the US stock market, we need to see evidence of durable growth.
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