Barclays Slashes S&P 500 Target as Tariffs and Economic Worries Rattle Markets
Staff Editor Barclays Slashes S&P 500 Target Amid Economic Concerns and Tariff Disruptions
Barclays has significantly lowered its year-end target for the S&P 500 to 5,900, making it the most conservative prediction among major banks. The firm’s previous target of 6,600 was revised downward due to deteriorating economic data and ongoing tariff-related disruptions.
This move follows similar adjustments by other financial institutions. RBC and Goldman Sachs have both reduced their forecasts, now projecting the S&P 500 to reach 6,200 by year-end. Meanwhile, Citi and HSBC have downgraded their US stock outlooks to “neutral” without altering their price targets.
Barclays’ new projection suggests that the index may have already peaked for the year, with only a minimal 0.3% gain expected from current levels.
The impact of tariffs on the US economy is a key factor in these revised outlooks. Barclays analysts estimate that Chinese and reciprocal tariffs could reduce S&P 500 earnings per share by 1.6%, with additional retaliatory measures potentially causing a further 0.7% decrease. Overall, tariffs are expected to cut S&P 500 earnings per share by more than 2%.
The Trump administration’s tariff policy, which affects imports from China, Canada, Mexico, and the EU, continues to create uncertainty in the market. New auto tariffs are anticipated to be announced, further complicating the economic landscape.
Earnings growth remains crucial for stock market gains, and Barclays has consistently cautioned about the negative impact of escalating tariffs on corporate profits. The firm warns that a full-blown trade war could reduce earnings per share by as much as 2.8%.
However, not all scenarios are pessimistic. If tariffs were to be reduced, S&P 500 valuations could see significant improvement. Conversely, in a worst-case scenario involving comprehensive tariffs from Canada, Mexico, and China, the US could face a GDP contraction and a bear market. This could potentially drive the S&P 500 down to 4,400, although Barclays assigns only a 15% probability to this outcome.
As global trade tensions continue to evolve, investors and analysts alike will be closely monitoring economic indicators and policy developments for signs of market direction in the coming months.
