Market strategists are shifting their outlook, even as economic signals suggest a potential slowdown. Here’s why some are getting bullish on stocks.

In the past few months, there’s been an unexpected buzz on Wall Street: strategists are getting increasingly optimistic about stock performance, despite a cooling labor market and slowing economic activity. 

With the S&P 500 hovering near the 6,000 mark, financial analysts have begun defending year-end targets ranging from 6,300 to 6,500. According to an expert financial strategist at Logirium, this shift points to a key factor: tariff fears may no longer weigh heavily on the markets.

Market Sentiment: The Calm After the Storm

Despite recent volatility, data suggests that the worst of tariff-driven inflation fears may be over. Wall Street strategists are confident that the market has already priced in a moderate economic slowdown, with the S&P 500 absorbing much of the negative impact. As inflation fears recede, many experts see a strong potential for recovery. 

A key strategist noted that stocks often react faster than economic indicators, moving ahead of lagging data like job reports or inflation numbers. In 2025, the market has shown resilience, factoring in risks before they appear in official reports or earnings revisions.

Economic Data: Mixed Signals, But No Panic

There’s no doubt that the economic data has been mixed. The job market showed signs of cooling, with private-sector job growth hitting a two-year low in May. Unemployment claims also surged to levels not seen since late 2024. 

At the same time, the government revised job figures from earlier months, showing that fewer jobs were created in March and April than initially reported.

However, this slowdown has been widely anticipated. Analysts from Goldman Sachs point out that softer economic data tends to hit its lowest point before hard data, like inflation or employment figures, catch up. 

In fact, soft data, which includes things like consumer surveys, has shown positive momentum recently. For example, the Conference Board’s Future Expectations Index saw its largest increase since 2009, signaling that consumer confidence may be on the mend.

The Role of Tariff Uncertainty

For many analysts, the turning point in market optimism comes from easing tariff uncertainties between the US and China. Citi’s equity strategy team recently raised its S&P 500 target to 6,300, up from an earlier forecast of 5,800, citing the end of tariff uncertainty as a major factor. 

With the suspension of tariff hikes between the two global economic powers, fears that tariffs would lead to long-term economic stagnation seem to have dissipated.

Additionally, economic growth projections are no longer sliding. After plummeting in early May, forecasts for US GDP growth in 2025 have stabilized at an annualized pace of 1.4%. For many strategists, this stabilization offers a positive outlook for equities, particularly in sectors such as technology and growth stocks.

The Bullish Case: Why Growth Stocks Look Attractive

As interest rates remain elevated and stock valuations stay high, growth stocks, especially those in the technology sector, have captured the attention of investors. The momentum behind artificial intelligence (AI) has provided a significant boost to large-cap tech companies, making them attractive to investors seeking growth.

Big Tech companies are well-positioned to benefit from AI advancements. These companies continue to deliver strong earnings reports, despite the broader economic slowdown. The rising optimism surrounding AI technologies has sparked renewed interest in these stocks, further strengthening the bullish case for equities.

What Investors Should Watch For

While the bullish sentiment is growing, potential risks remain. A key concern is whether economic growth will slow more than expected, with some strategists warning that a further decline in economic activity could undermine the market rally. 

Should GDP growth fall short of projections, it may trigger volatility. Investors should monitor upcoming economic data, such as employment reports and consumer confidence surveys, to gauge market sustainability. 

Additionally, signs of economic overheating or renewed tariff disputes could dampen the optimism, causing market fluctuations.

Looking Ahead: Balanced Optimism in the Market

As the stock market navigates a period of mixed economic signals, there’s a cautious optimism emerging on Wall Street. With tariffs less of a concern and growth forecasts stabilizing, many analysts believe the stock market could continue to grind higher, albeit with occasional bumps along the way. 

Investors who focus on quality growth stocks, particularly in the technology sector, might see attractive returns as AI-related innovations continue to drive the market forward.

Final Thoughts: A Market on the Move

It’s clear that the outlook for stocks is more bullish than it has been in recent months. While uncertainties still remain, the bull case for equities is becoming stronger, especially as tariff concerns ease and growth prospects stabilize. 

For investors, the key will be to stay informed, monitor economic data closely, and focus on sectors that show the most promise. Whether you’re a seasoned investor or a newcomer to the market, now is the time to keep an eye on the S&P 500’s journey as it edges closer to its year-end targets.