Faced with Trump's capriciousness and continuous critical strike, one of the biggest bulls on Wall Street also raised his hand to admit defeat, giving up expectations that the company would make a huge profit this year and the US stock market will make rapid progress.

Deutsche Bank strategists led by Bankim Chadha cut the S&P 500's year-end price target by 12% to 6,150 points. Although this target price may still have 14% room for upside from Wednesday's closing price, it also means that the index can only make up for losses since its peak in February. Before this adjustment, they have always been one of the teams that are most optimistic about the US stock market.

Chadha also expects earnings from S&P 500 components to fall by 5% this year, while the market generally expects to grow by 8%.

"We have lowered the earnings per share expectations (EPS) for the S&P 500 index components in 2025 from $282 to $240," Deutsche Bank strategists wrote in a note. The general expectation is that there is a risk of further cuts, they added.

Since returning to the White House three months ago, Trump has drastically reformed several federal agencies, consolidated executive power, challenged global alliances, and reshaped U.S. trade relations with other countries around the world.

The U.S. stock market is under the impact of Trump's radical trade policies that have weakened investors' confidence in U.S. assets. While some initially announced policy delays triggered a brief market rebound, the S&P 500 still fell nearly 9% this year, while the U.S. dollar fell 8.4%.

After triggering the worst market sell-off in years, Trump posted on Truth Social earlier this month: "I think it's going very well - the market will skyrocket, and it's a good time to make a fortune." Trump disagreed with the market plunge, suggesting it's a price worth paying to reshape the economy.

But analysts have begun to worry about the profit outlook due to the risks of the economic slowdown, and Deutsche Bank's correction to corporate earnings has approached an extreme downward range.

Strategists estimate that the newly revised tariff rate will increase the actual tax rate for imported goods from 2.3% to 26.4%, which is actually an increase of $800 billion in tax revenue. By comparison, the total U.S. federal corporate income tax in 2024 is about $500 billion.

In the short term, Deutsche Bank strategists expect the S&P 500 to fluctuate in the range of 4600 to 5600 points. Given that the holding level in the stock market has dropped to the bottom of the historical range, this means that if positive news comes, the market is prone to rebound.

In order for the economic situation to continue to improve, the U.S. government needs to make concessions on current trade policies. Strategists believe that as the U.S. economy begins to deteriorate, the Trump administration will face increasing pressure and concessions may occur. However, the longer the wait, the greater the chance of signs of recession.

Chadha believes that he may ease tariffs only if the public's approval rating for Trump has dropped sharply. “Public approval ratings are usually higher during the honeymoon period after the new government comes to power, but over time, the approval ratings will adjust based on changes in economic performance and consumer confidence.”

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