Alibaba, Baidu shares soar on reported shift to in-house AI chips
Investing.com - Deutsche Bank raised its year-end S&P 500 price target to 7000 from 6550, citing stronger-than-expected earnings and manageable tariff impacts.
The bank increased its 2025 S&P 500 EPS estimate from $267 to $277 following better-than-expected second-quarter earnings, with companies reporting only modest effects from tariffs. Deutsche Bank projects 2026 EPS at $315.
Despite concerns about an economic slowdown, Deutsche Bank noted that macroeconomic growth did not weaken in Q2, and third-quarter indicators continue to show above-trend growth rates. Earnings growth rose to 10% in Q2, which the bank describes as typical for non-recessionary periods.
The firm’s demand-supply framework, which combines positioning changes with inflows and buybacks, points to 8% upside potential by year-end. Deutsche Bank expects equity valuations to remain elevated compared to historical standards.
Deutsche Bank maintains a cyclical tilt in its sector positioning with neutral ratings on mega-cap growth and technology stocks, overweight ratings on financials, consumer cyclicals and industrials, and underweight ratings on defensive sectors. Regionally, the bank is overweight on U.S. and European markets.
In other recent news, the U.S. Department of the Treasury announced plans to offer $125 billion in Treasury securities. This move is set to refund about $89.8 billion of privately-held Treasury notes and bonds maturing in August 2025, while also raising approximately $35.2 billion in new cash from private investors. Meanwhile, Goldman Sachs maintains a positive outlook on long positions in the front-end of the U.S. yield curve, favoring positions that could benefit from the market pricing in faster interest rate cuts. The investment bank is rolling forward its one-month two-year receiver recommendation and adding low strike three-month 2s5s conditional bull steepeners. Additionally, Bank of America analysts foresee significant divisions within the Federal Open Market Committee at its September meeting, with some members expected to advocate for larger interest rate cuts. Richmond Federal Reserve President Tom Barkin noted ongoing demographic challenges in the labor market, with uncertainty in hiring trends as baby boomers exit the workforce. Chicago Federal Reserve President Austan Goolsbee is evaluating the impact of tariffs on inflation, a crucial factor in the timing of interest rate cuts. These developments reflect a dynamic economic landscape as various financial and governmental institutions respond to evolving market conditions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.