Deutsche Bank has lifted its year-end S&P 500 target to 7,000 from 6,550, restoring its original forecast for 2025. Chief global strategist Binky Chadha said the index has regained its three-year uptrend following the Liberation Day selloff, with equities advancing at an annual pace of 22.7%.
Chadha told CNBC that tariffs have not weighed on growth or inflation as feared, while earnings momentum has accelerated. Corporate profits rose 10% in Q2, up from 8.7% in Q1, in line with typical non-recessionary periods. As firms report tariff impacts as modest, Deutsche has raised its 2025 EPS forecast to $277 (from $267) and set 2026 estimates at $315.
The bank expects valuations to remain high, supported by stronger payout ratios and confidence in earnings durability. Chadha noted that discretionary investor positioning is neutral, suggesting room for upside if sentiment shifts. Deutsche’s demand-supply model, which factors in flows, buybacks and positioning, implies around 8% further gains by year-end.
While acknowledging risks around trade and policy, Chadha argued that macro growth and earnings remain the dominant drivers. He added that rates are a “sideshow” unless they deliver a major surprise, and any tariff-driven inflation is likely to be limited and temporary compared with the 2021–22 surge.
