One chart shows how the market has moved on from tariffs — for now

The S&P 500 is increasingly unaffected by tariff headlines, a trend Goldman Sachs' David Kostin attributes to investor expectations of lower settled rates and minimal observed economic impact. This market resilience reflects a focus on robust longer-term growth, with Kostin projecting a 10% S&P 500 gain over 12 months, while Morgan Stanley's Mike Wilson anticipates the index reaching 7,200, citing corporate earnings resilience, positive operating leverage, and limited tariff-related margin concerns.

Analysis

The S&P 500 is demonstrating a marked desensitization to tariff-related news, a shift from its aggressive reactions earlier in the year. According to analysis from Goldman Sachs' David Kostin, this resilience stems from investor consensus that final tariff rates will settle lower than announced and from economic data showing a smaller-than-feared impact on consumer spending, inflation, and the labor market. This sentiment is reinforced by resilient Q2 corporate financial updates, leading investors to look past potential near-term weakness and focus on a robust growth outlook for 2026. Consequently, Goldman Sachs projects the S&P 500 will gain 10% over the next 12 months. This optimistic view is echoed by Morgan Stanley's Mike Wilson, who is leaning towards his bull case of the S&P 500 reaching 7,200 within a year, citing strong corporate earnings, returning positive operating leverage from lower wage costs, and potential enhancements from AI adoption. While corporates have not yet reported significant margin pressure from tariffs, Wilson notes this is a key risk factor to monitor in Q3 earnings calls.

Key Decisions for Investors

• Given the optimistic market forecasts from both Goldman Sachs and Morgan Stanley, investors may consider maintaining long-term equity exposure, as the market appears focused on a positive 2026 earnings trajectory rather than near-term trade disputes.
• Investors should shift their focus from reacting to tariff headlines to analyzing fundamental drivers like corporate earnings resilience and positive operating leverage, particularly potential margin enhancements from AI and lower wage costs.
• It is critical to monitor upcoming Q3 corporate earnings guidance for any emerging commentary on tariff-related cost pressures, as this represents a key risk that could challenge the current bullish thesis.