Wall Street bulls up even as tariffs roar back

Two of Wall Street's biggest banks have very differing views of how the economy will develop this year, but they agree on one thing: Don't sweat tariffs, just buy stocks. Why it matters: Both Goldman Sachs and Bank of America emphasize the continued resilience of corporations, regardless of tariff policy.That view holds regardless of any pessimism about the broader economy.The big picture: BofA sees stagflation ahead — continued inflation with a side of slowing growth. But the bank makes the argument that even in the stagflationary 1970s, some sectors, such as large-cap value stocks, still outperformed handsomely.On the other hand, Goldman sees solid growth and cooling inflation that allows the Federal Reserve to cut rates deeper, earlier.Between the lines: A portfolio built for resilience in a stagflationary environment could look quite different than a portfolio built to benefit from a kick-started growth cycle.BofA's stagflation playbook argues for large-cap value over growth stocks, stocks over bonds and dividend-paying names that can generate income and protect against inflation.Goldman's playbook for the second half of 2025 prioritizes balanced sector allocation, emphasizing sectors like software and services that can still benefit from AI; alternative asset managers that have lagged the broader sector; and companies with high floating-rate debt that can benefit from lower bond yields.Zoom out: BofA has a 6,300 price target on the S&P heading into year-end, while Goldman has a 6,600 price target for the same window. "No recession, equity prices rally, that is our baseline," said Goldman's David Kostin."I do not want to be short equities in this environment," said BofA's Savita Subramanian.Yes, but: What about the tariffs? Both BofA and Goldman remain bullish on corporate performance regardless."The US isn't exceptional, but Corporate America might be," Subramanian titled her note outlining the call behind the bank's raised target.Kostin emphasized the continued strength of the largest stocks in a note to clients.The bottom line: The forecasts differ on the economic path forward, but neither overemphasizes the risk of tariff policy, and both imply a bullish outlook for stocks this year.

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