Barclays slashes its S&P 500 target to the lowest among big banks with tariff and growth concerns rising
From Yahoo Finance: 2025-03-26 22:03:00
Barclays cut its S&P 500 year-end target to 5,900, the lowest among major banks, predicting a 2% earnings per share slash from tariffs. RBC and Goldman Sachs also downgraded targets to 6,200, while Citi and HSBC shifted outlooks to “neutral.”
Barclays warns of a peak for the S&P 500, projecting a meager 0.3% gain to 5,900 for the year. Analysts expect earnings to suffer from tariffs, potentially slowing US activity without causing a recession, allowing valuations to gradually recover.
The Trump administration’s tariff-heavy trade policy has affected imports from China, Canada, Mexico, and the EU. Barclays predicts Chinese and reciprocal tariffs could decrease S&P 500 earnings per share by 1.6%, with additional retaliation leading to a 0.7% drop. Earnings growth is crucial for stock market gains.
Barclays has repeatedly cautioned about EPS declines due to tariffs, with a full-blown trade war potentially slashing EPS by 2.8%. The severity of White House tariffs will impact S&P 500 valuations, with potential for a surge if tariffs are reduced. There is a bear case scenario with a 15% probability of a bear market down to 4,400.