Many on Wall Street are maintaining a bullish stance despite renewed trade tensions stirred by former President Donald Trump this week. But Barry Bannister, chief equity strategist at Stifel, remains firmly in the bearish camp, warning of a looming correction that RIAs and wealth managers should keep on their radar.
While firms like Goldman Sachs and Bank of America raised their S&P 500 year-end targets on Tuesday, Bannister reaffirmed his call for a 12% pullback in the second half of 2025. He expects the index to finish the year around 5,500.
“They’re not thinking outside the box with these big, bold upgrades,” Bannister said during an appearance on CNBC. “We continue to see signs of weakness building in the back half of the year.”
He points to consumer behavior as one of the clearest red flags. Early results from Amazon Prime Day suggest a softening in discretionary spending, with sales volume down 14% year over year, according to data from Momentum Commerce. For advisors monitoring client portfolios tied to retail and consumer discretionary sectors, this drop could be a signal of deeper strain in household budgets.
It’s not just the consumer showing fatigue. Corporate America is likely to slow capital investment as tariff uncertainty re-emerges, adding another drag to growth. Strategists across the street are adjusting their GDP outlooks downward for the second half of the year, citing cooling consumer demand and signs of labor market softening.
For advisors, this means reviewing client allocations with an eye on cyclical exposure and the durability of earnings assumptions.
Inflation trends aren’t helping either. Bannister warns that the economy is flirting with stagflation—a combination of stagnant growth and persistent inflation—that could erode earnings and weigh particularly heavily on the large-cap tech names that have led the rally.
His base case calls for core PCE inflation—excluding food and energy—to climb above 3% by year-end as new tariffs filter through the pricing system. For reference, May’s reading was 2.7%. If his outlook proves accurate, the Fed would be forced to keep policy tight, limiting the potential for rate cuts that markets have increasingly priced in.
Bannister doesn’t expect a repeat of the 20% selloff seen in April, but he cautions that the market’s current optimism may be excessive.
“This could be an echo of what we saw earlier in the year—maybe not as severe, but still meaningful,” Bannister said. “It’s an echo of stagflationary pressures making their way through markets again.”
For wealth advisors and RIAs, the message is clear: This is a time for heightened vigilance. Tactical adjustments, especially around rate-sensitive and economically exposed sectors, may be warranted. Bannister’s view stands as a counterweight to the prevailing bullish consensus—and a reminder that portfolio resilience remains essential heading into year-end.
