Key Takeaways
- Bank of America (BofA) and Goldman Sachs (GS) have revised down their US nonfarm payroll and GDP growth forecasts for late 2025 and 2026, with BofA projecting average payroll growth of around 50,000 in 2H 2025 and 70,000 in 2026, largely due to supply-side factors.
- The Kremlin has voiced concerns over an urgent escalation of tensions in the Middle East, including nuclear ones, while simultaneously stating that no breakthrough is expected in the upcoming round of negotiations with Ukraine.
- BofA Global Research upgraded UBS Group AG (UBS) to Neutral from Underperform, raising its price objective to CHF 31 from CHF 25.
- Scotiabank significantly increased price targets for major tech companies: Alphabet Inc. (GOOGL) to $240 from $200, Amazon (AMZN) to $275 from $250, and Meta (META) to $675 from $525.
Economic Outlook Softens for Late 2025 and 2026
Leading financial institutions are adjusting their outlooks for the U.S. economy, signaling a potential slowdown in job growth and overall economic expansion. Bank of America (BofA) has lowered its nonfarm payroll forecasts to an average of approximately 50,000 in the second half of 2025 and 70,000 in 2026, down from previous estimates of 70,000 and 75,000, respectively. This anticipated deceleration is primarily attributed to supply-side factors rather than a significant drop in demand. BofA also expects the unemployment rate (u-rate) to increase by only about a tenth per quarter for three quarters.
Concurrently, Goldman Sachs (GS) projects real US GDP growth to remain below 2% this year and next, with payroll growth at 90,000 per month or below for the remainder of the year. This aligns with a broader sentiment of a cooling labor market, though some reports indicate continued resilience.
Geopolitical Tensions Escalate in Middle East and Ukraine
Geopolitical developments remain a focal point, with the Kremlin issuing stark warnings regarding international stability. The Kremlin stated that it sees an urgent escalation of the situation in the Middle East, including nuclear tensions. This follows recent discussions between Russian President Vladimir Putin and Iranian officials concerning Iran's nuclear program and regional escalations. Russia has offered mediation efforts in the Middle East, while condemning Israeli strikes on Iranian facilities.
On the Ukraine front, the Kremlin has tempered expectations for the upcoming round of negotiations, stating that no breakthrough is expected. Discussions on the agenda are described as "complicated," and memorandums need to be thoroughly discussed. Previous rounds of talks in Istanbul have yielded prisoner exchanges but no significant progress towards a ceasefire or an end to the conflict, with both sides remaining "diametrically opposed" on key issues.
Analyst Ratings and Price Target Adjustments
In the financial sector, BofA Global Research has upgraded UBS Group AG (UBS) to Neutral from Underperform, simultaneously raising its price objective for the Swiss banking giant to CHF 31 from CHF 25. This upgrade reflects a more attractive proposition for UBS, combining some relative headwinds with areas of strong growth.
Meanwhile, Scotiabank has shown increased confidence in several major technology companies. The firm raised its target price for Alphabet Inc. (GOOGL) to $240 from $200. Amazon (AMZN) also saw its target price increased to $275 from $250. Furthermore, Meta Platforms (META) received a substantial target price hike to $675 from $525. These adjustments signal a bullish outlook from Scotiabank on the growth prospects of these tech giants.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.