Market Outlook: Optimism around 2026 U.S. growth may be overdone

U.S. Growth Outlook May Be Overly Optimistic
Modest 2026 forecast ahead as tax cuts, labour markets, and inflation signal slower growth for $SPY
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Federal Judge Allows Dominion Energy to Resume Offshore Wind Project Construction - Cozzy Energy Solutions A US federal judge has granted Dominion Energy permission to resume construction on its $11 billion offshore wind project off Virginia's coast while it contests a government order that initially halted the development due to unspecified national security concerns, citing substantial financial losses of approximately $5 million daily for the company. The ruling follows similar decisions allowing other wind projects in Rhode Island and New York to proceed, as Dominion argues the halt is arbitrary and would inflict further harm on its investment and project timeline, which was intended to power 660,000 homes by this year.

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Apollo Global Management Chief Economist Torsten Slok argues the U.S. economy is entering a stronger phase than many anticipate, citing clear signs of resilience in key credit indicators

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Fed rate cuts, U.S. growth seen supporting S&P 500 gains, Goldman analysts say Investing.com - "Imminent" Federal Reserve interest rate cuts and a re-acceleration of growth next year will help support more gains in the benchmark S&P 500, according to analysts at Goldman Sachs. In a note to clients, the strategists led by David Kostin said the bank’s economists anticipate that the Fed will slash its key funds rate three times over the rest of this year. The Fed is widely anticipated to slash borrowing costs by at least 25 basis points at its upcoming gathering next week, as officials look to bolster what appears to be a slowing labor market. But some debate continues to hover around the Fed’s outlook for the rest of the year, especially as inflation -- the other pillar of the central bank’s dual mandate -- lingers above its 2% target level. More U.S. inflation data points, including a look at consumer and producer prices, are set to be released in the coming days. Still, the Goldman analysts predicted that the U.S. economy is likely to avoid a recession, despite the impact of sweeping import tariffs slapped on a number of trading partners by President Donald Trump. Against this backdrop, the S&P 500, which Goldman noted has "typically generated positive returns" during past Fed rate-cutting cycles in which the economy has expanded and averted a downturn, is seen rising by 2% through the end of 2025 and 6% by the middle of next year. This would correspond to an end-2025 price level of 6600 and 6900 by mid-2026, the analysts said. The S&P finished on Friday at 6481.50. 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. They added that earnings will likely be the main drivers of these higher returns, flagging that recent lofty valuations are already embedding in "an optimistic economic and fundamental outlook." So-called "catch up" trades in lagging pockets of the market could also be seen, although a potential unwinding of the multi-year boom in enthusiasm around artificial intellgience may lead to a reversal in other parts of the index, the analysts argued. Heading into the final quarter of 2025, they recommended that investors keep tabs on alternative asset managers, "whose valuations have yet to recover back" to highs notched after the 2024 U.S. presidential election even as capital market conditions improve. Companies with high floating rate debt are also projected to benefit from interest rate cuts, while gold mining stocks are tipped to be boosted by a jump in bullion prices. Which stocks should you consider in your very next trade? The best opportunities often hide in plain sight—buried among thousands of stocks you'd never have time to research individually. That's why smart investors use our Stock Screener with 50+ predefined screens and 160+ customizable filters to surface hidden gems instantly. For example, the Piotroski's Picks method averages 23% annual returns by focusing on financial strength, and you can get it as a standalone screen. Momentum Masters catches stocks gaining serious traction, while Blue-Chip Bargains finds undervalued giants. With screens for dividends, growth, value, and more, you'll discover opportunities others miss. Our current favorite screen is Under $10/share, which is great for discovering stocks trading under $10 with recent price momentum showing some very impressive returns!

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BofA lifts U.S. Q3 growth view to 1.5% on stronger consumption Investing.com -- Bank of America has revised up its outlook for U.S. growth in the third quarter, citing signs of stronger consumer spending despite ongoing risks to the labour market. “We remain constructive on the economy. With signs of a rebound in consumption, we mark up 3Q25 growth from 1.0% to 1.5%. As a result, 4Q/4Q growth increases to 1.5%,” BofA analysts wrote in their latest U.S. Economic Weekly note. The bank said the labour market remains the key downside risk, though it argued that “supply factors explain much of the recent slowdown.” At the same time, inflation pressures are expected to persist. “Core PCE inflation should get stuck in the low 3s for about a year,” BofA said, adding that long-end rates could rise if the Federal Reserve cuts rates in such an environment, “indicating a policy mistake.” BofA highlighted that the ISM indexes rose in August, consistent with its view of a rebound in the second half of the year, though auto sales slipped to 16.1 million after a July surge tied to expiring EV tax credits. Analysts described their “cautious optimism” as premised on labour market resilience, calling today’s August jobs report “pivotal.” Looking ahead, BofA expects August CPI and PPI to each rise 0.3 percent month-on-month, with core CPI running at 3.1 percent year-on-year. “Based on this, we currently expect Aug core PCE to advance to 3.0%,” it said. 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Should you invest $2,000 in BAC right now? First, check if it's included in one of this month's AI-powered stock strategies for ProPicks AI. Investing.com created these strategies to identify the most exciting trading opportunities currently in the market. The stocks that made the cut could produce monster returns in the coming years, like ViaSat and Sapiens, both up over 60%+ each in Q2 of 2025 alone. Is BAC one of them?

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Domino’s Pizza hit with downgrade on slower growth Investing.com --Shares of Domino’s Pizza (NASDAQ:DPZ) Inc were downgraded by RBC Capital Markets to Sector Perform from Outperform saying it anticipates weaker U.S. sales growth and slower international expansion in higher-revenue markets. RBC said that while recent drivers such as partnerships with DoorDash (NASDAQ:DASH) and Uber (NYSE:UBER) Eats have boosted same-store sales, those effects may taper off in the second half of 2026 as the company laps those initiatives. Shares of Domino’s Pizza trading slightly down at $471.26 before the opening bell. “With risk/reward ultimately appearing too balanced at current levels to warrant the Outperform, we downgrade to Sector Perform,” analyst said. The brokerage sees limited scope for further increases in valuation given expected deceleration in U.S. comparable sales growth next year. It also flagged that much of Domino’s international store growth is now coming from lower average-unit-volume (AUV) markets such as China and India, which could weigh on overall international sales momentum. Domino’s market share gains have slowed in recent years despite the broader adoption of third-party delivery platforms, RBC said, noting heightened competition from smaller chains and local operators. The firm trimmed its price target on the stock to $500 from $550. “While our downgrade thesis doesn’t assume multiple contraction, the potential for slowing comps in 2H26 doesn’t appear supportive of multiple expansion,” analysts at RBC said. Though upside risks include stronger durability of current sales drivers or better-than-expected growth in higher-volume international markets, RBC sees limited room for multiple expansion given its 2026 EPS growth estimate of 5.5%. Don't miss out on the next big opportunity! Stay ahead of the curve with ProPicks AI – 6 model portfolios fueled by AI stock picks with a stellar performance this year... In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. That's an impressive track record. With portfolios tailored for Dow stocks, S&P stocks, Tech Stocks, and Mid Cap stocks, you can explore various wealth-building strategies. So if DPZ is on your watchlist, it could be very wise to know whether or not it made the ProPicks AI lists.

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US economy project strong growth through 2025 driven by tech innovation & infrastructure investment! June 2025 🚀 #ForbesEcon #USGrowth learn how i got $1256 grant for my business: tinyurl.com/financialhel...

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Stock Market News, June 3, 2025: Nasdaq Moves Higher; OECD Cuts U.S. Growth Outlook - WSJ Stock Market News, June 3, 2025: Nasdaq Moves Higher; OECD Cuts U.S. Growth Outlook  WSJ

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Stock Market Today: Dow, S&P 500 Slip; OECD Cuts U.S. Growth Outlook — Live Updates - WSJ Stock Market Today: Dow, S&P 500 Slip; OECD Cuts U.S. Growth Outlook — Live Updates  WSJ

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Stock Market Today: Dow, S&P 500 Slip; OECD Cuts U.S. Growth Outlook — Live Updates - WSJ Stock Market Today: Dow, S&P 500 Slip; OECD Cuts U.S. Growth Outlook — Live Updates  WSJ

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OECD trims global outlook as Trump trade war hits U.S. growth PARIS (Reuters) -Global economic growth is slowing more than expected only a few months ago as the fallout from the Trump administration’s trade war takes a bigger toll on the U.S. economy, the OECD said on Tuesday, revising down its outlook. The global economy is on course to slow from 3.3% last year to 2.9% in 2025 and 2026, the Organisation for Economic Cooperation and Development said, trimming its estimates from March for growth of 3.1% this year and 3.0% next year. But the growth outlook would likely be even weaker if protectionism increases, further fuelling inflation, disrupting supply chains and rattling financial markets, the Paris-based organisation said in its latest Economic Outlook. U.S. President Donald Trump’s tariff announcements since he took office in January have already roiled financial markets and fuelled global economic uncertainty, forcing him to walk back some of his initial stances. Last month, the U.S. and China agreed to a temporary truce to scale back tariffs, while Trump also postponed 50% duties on the European Union until July 9. The OECD forecast the U.S. economy would grow only 1.6% this year and 1.5% next year, assuming for the purpose of making calculations that tariffs in place mid-May would remain so through the rest of 2025 and 2026. For 2025, the new forecast marked a sizeable cut as the organisation had previously expected the world’s biggest economy would grow 2.2% this year and 1.6% next year. While new tariffs may create incentives to manufacture in the United States, higher import prices would squeeze consumers’ purchasing power and economic policy uncertainty would hold back corporate investment, the OECD warned. Meanwhile, the higher tariff receipts would only partly offset revenues lost due to the extension of the 2017 Tax Cuts and Jobs Act, new tax cuts and weaker economic growth, it added. Trump’s sweeping tax cut and spending bill was expected to push the U.S. budget deficit to 8% of economic output by 2026, among the biggest fiscal shortfalls for a developed economy not at war. As tariffs fuel inflation pressures, the Federal Reserve was seen keeping rates on hold through this year and then cutting the fed funds rate to 3.25-3.5% by the end of 2026. In China, the fallout from the U.S. tariff hikes would be partly offset by government subsidies for a trade-in programme on consumer goods like mobile phones and appliances and increased welfare transfers, the OECD said. It estimated the world’s second-biggest economy, which is not an OECD member, would grow 4.7% this year and 4.3% in 2026, little changed from previous forecasts for 4.8% in 2025 and 4.4% in 2026. The outlook for the euro area was unchanged from March with growth forecast this year at 1.0% and 1.2% next year, boosted by resilient labour markets and interest rate cuts while more public spending from Germany would buoy 2026 growth. The UK outlook was a tad better than in March with growth forecast at 1.3% this year and 1.0% in 2026, revised marginally lower from March estimates for 1.4% in 2025 and 1.2% in 2026.

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Animal Spirits Unchained: Is it time for new offerings, mergers, and acquisitions?
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JPMorgan CEO Dimon warns tariffs could slow US growth, fuel inflation NEW YORK (Reuters) -JPMorgan Chase CEO Jamie Dimon cautioned investors that the turmoil caused by U.S. tariffs and a global trade war could slow growth in the world’s largest economy, spur inflation and potentially lead to lasting negative consequences. In his annual letter to shareholders, published on Monday following a rout last week that wiped off trillions of dollars from global stock markets, Dimon expressed concerns about how the tariffs would impact America’s long-term economic alliances. Asian stocks plunged on Monday as investors braced for more losses. "The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ’trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility," Dimon wrote. Dimon, 69, has run the largest U.S. bank for 19 years and is one of the most prominent voices in corporate America. "We are likely to see inflationary outcomes ... Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth." JPMorgan’s economists raised the risk of a U.S. and global recession this year to 60% from 40% after U.S. President Donald Trump unveiled the steepest trade barriers in more than 100 years last week. When asked on Sunday about falling markets, Trump said sometimes you have to take medicine to fix something. Dimon noted the potential for retaliation by other countries and said tariffs could affect economic confidence, investments, capital flows, corporate profits and the dollar. "The quicker this issue is resolved, the better because some of the negative effects increase cumulatively over time and would be hard to reverse," the CEO wrote. Dimon often weighs in on government policies, and has been consulted by officials in times of crisis. His name was floated for senior economic roles in government during the 2024 presidential campaign, including Treasury secretary, but he stayed put at the bank. Tariffs also raise questions about the direction of interest rates, Dimon said. While rates have declined recently because of the weaker dollar, the prospect of slower growth and declining risk appetite could cause rates to rise, he said, referring to the stagflation of the 1970s. "We enter this time of uncertainty with high equity and debt prices, even after the recent decline ... markets still seem to be pricing assets with the assumption that we will continue to have a fairly soft landing. I am not so sure," Dimon wrote.

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JP Morgan raises global recession risk to 60% as Trump’s tariffs hit U.S. growth JPM analysts say Trump’s combined tariff hikes amount to a 22% increase—comparable to the largest U.S. tax rise since 1968. As a result, the bank has raised its estimated risk of a global recession to 60%, up from 40%. The note highlights concerns that the economic impact could be worsened by potential retaliation, supply chain disruptions, and a hit to business confidence. JPMorgan also warns that ongoing trade restrictions and reduced immigration could lead to long-term supply-side issues that dampen U.S. growth. Still, the bank notes that both the U.S. and global economies remain fundamentally strong and should be able to absorb a moderate shock, though it expects further policy developments in the near future. info via Reuters report This article was written by Eamonn Sheridan at www.forexlive.com.

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Lululemon downgraded by Raymond James on slowing U.S. growth Investing.com -- Raymond James downgraded Lululemon Athletica (NASDAQ:LULU) Inc to Market Perform from Outperform on lower U.S. growth despite efforts to accelerate innovation. There are concerns over weaker U.S. traffic, which led to disappointing guidance for fiscal 2025. U.S. growth is expected to be modest, with North America contributing about majority of sales, around 75% of total revenue, limiting overall growth. “Despite favorable initial reads from recent product launches, the U.S. remains challenged and is only planned to grow modestly in FY25,” Raymond James said. Lululemon’s FY25 revenue growth is projected at 5-7%, below Street estimates of 7.5%, while EPS guidance of $14.95-$15.15 trails the consensus of $15.46. RJ noted Lululemon’s recent product missteps and expects only limited improvement. Lululemon’s gross margin is projected to decline by 60 basis points to 58.6% due to higher tariffs and deleverage from slower growth. Tariffs, particularly from China and Mexico, are expected to be a headwind. The company’s SG&A is also set to deleverage by 40-50 bp to 36.0% of revenue, reflecting increased investments in brand building, international growth, and technology. Lululemon’s international business remains a bright spot, with FY25 guidance implying 14% growth outside North America, compared to 34% growth in FY24. China grew 46% in Q4, outperforming expectations. The company plans to open 40-45 new stores globally, with a focus on China, and increase square footage by 10% in FY25. Raymond James highlighted competitive pressures from emerging brands such as Alo and Vuori, making it difficult for Lululemon to regain market share in the U.S. The firm also noted that while new products could outperform expectations, the U.S. market’s impact on the overall narrative remains a key risk. Lululemon has more innovation hitting later, but it remains to be seen if it’ll be a game changer. At the current after-market price of around $307, Lululemon trades at a price-to-earnings ratio of 18.5x FY26 estimates, which Raymond James does not consider particularly low.

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ENGIE Forms Strategic Partnership with Ares Management Corporation to Accelerate Renewable Energy Growth in US - Cozzy Energy Solutions ENGIE has formed a strategic partnership with Ares Management Corporation to accelerate the growth of renewable energy in the United States. This collaboration aims to develop over 700 megawatts (MW) of solar projects across the country, generating enough clean electricity to power approximately 230,000 homes. The partnership brings together ENGIE's extensive experience in renewable energy development and Ares' expertise in real assets investment management. The combined effort will focus on developing large-scale solar projects that can help reduce greenhouse gas emissions and contribute to a low-carbon economy. ENGIE's President of North American Renewable Energy Division, Andrew R. Rennich, expressed excitement about the collaboration with Ares Management Corporation. He stated that their expertise complements each other well, enabling them to deliver high-quality projects that meet the growing demand for clean energy. As part of its strategy to expand in the US solar market, ENGIE aims to develop a total of 4 gigawatts (GW) of renewable energy capacity by 2025. This partnership reflects Ares Management Corporation's commitment to investing in sustainable energy solutions that can help reduce carbon emissions and mitigate climate change. The first solar project developed under this partnership will be located in Arizona, where ENGIE will develop over 300 MW of solar capacity. This project is expected to create hundreds of jobs during the construction phase and provide clean energy to thousands of homes after completion. The collaboration highlights the growing trend of partnerships in the renewable energy sector, which are designed to accelerate the growth of clean energy projects and reduce costs through economies of scale. As demand for clean energy continues to grow, partnerships like this are expected to play an increasingly important role in driving innovation and reducing costs in the transition to a low-carbon economy. The partnership between ENGIE and Ares Management Corporation is a significant development in the US solar market, demonstrating the growing trend of collaborations in the renewable energy sector. This partnership showcases the potential for public-private partnerships to drive growth and innovation in the clean energy sector.

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The Federal Reserve has adjusted its U.S. growth forecasts downward and raised its inflation target, citing the impact of previous trade tariffs. These changes suggest a cautious approach to monetary policy in the near term.

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U.S. economic growth has consistently outperformed forecasts over the past two years:

- 2023: Forecasted 0.4%, delivered 2.5%
- 2024: Forecasted 1.2%, tracking 2.7%

With 2025 starting at 2.1%, the trend suggests more upside—but expect a rollercoaster ride ahead. 🎢📈

#Economy #USGrowth #GDP

US Enjoys, for Now, a Faster Speed Limit for Growth I’m Chris Anstey, an economics editor in Boston. Today we’re looking at the last batch of US pre-election economic indicators. Send us feedback and tips to ecodaily@bloomberg.net or get in touch on X ...

US Enjoys, for Now, a Faster Speed Limit for Growth
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👇🇨🇦🇺🇸"Downturn in Canada's economy seen deepening if U.S. growth fades" #CanadianEconomy #USGrowth
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