U.S.-China Tariff Truce: Wall Street Rushes to Rewrite Reports – No Recession, Bull Market Continues

TradingKey – Following the U.S.-China agreement to significantly cut tariffs after the Geneva negotiations, Wall Street giants like Goldman Sachs and JPMorgan Chase rushed to revise their economic forecasts, flipping from bearish to more bullish stances: lowering recession risks, raising GDP growth projections, and boosting year-end targets for U.S. equities.

On May 12, the same day the U.S. and China jointly announced their tariff-cutting deal, Goldman Sachs issued a revised report, upgrading its forecast for U.S. GDP growth in 2025 from 0.5% to 1%, while slashing the probability of a U.S. recession from 45% to 35%. The bank also raised its 12-month target for the S&P 500 to 6,500 points, signaling strong confidence in the continuation of the bull market.

Shortly after, JPMorgan Chase followed suit, noting that the recent rollback of some of the harshest U.S. tariffs on Chinese imports would reduce the risk of an economic downturn in 2025.

The bank upgraded its U.S. GDP growth forecast for 2025 from 0.2% to 0.6%, and lowered its inflation outlook from 4% to 3.5%.

JPMorgan analysts also pointed out that the labor market outlook no longer necessitates immediate Fed intervention to prevent job losses, leading the bank to push back its expected first Fed rate cut from September to December.

Cooler Inflation Data Reinforces Optimism

On May 13, the U.S. Bureau of Labor Statistics released the April Consumer Price Index (CPI) report, which showed:

• Headline CPI rose 2.3% year-over-year , below both the previous print and expectations of 2.4%.
• Core CPI (excluding food and energy) came in at 2.8%, matching both forecasts and prior readings.

Markets had initially feared that the Trump-era tariffs would push inflation higher, but the latest data suggests price pressures are continuing to ease, reinforcing investor optimism about both inflation control and economic resilience.