Barclays lowers 2025 S&P 500 target to 5,900

Barclays has reduced its target for the S&P 500 index, marking it as the lowest on Wall Street. The new target for 2025 is set at 5,900, down from the previous 6,600. This adjustment suggests only a small gain of 0.3% for the index from the start of the year. The change comes amid growing global trade tensions, particularly due to new tariffs imposed by the U.S. on countries like Canada, Mexico, and China. President Donald Trump is expected to announce further "reciprocal tariffs" soon. As a result, both consumers and investors are expressing concerns about the U.S. economic outlook. Barclays strategist Venu Krishna believes that the earnings of companies may suffer. He estimates that tariffs will slow down U.S. economic activity without leading to a full recession. The forecast includes two scenarios: optimism if tariffs are reduced due to political pressure, and pessimism if tariffs lead to greater economic strain. In the best-case scenario, S&P 500 valuations could rise to 6,700, while the worst-case could see the index fall to 4,400, representing a significant drop. The S&P 500 has already experienced a volatile month, recently dipping over 10% from its record high. Krishna has upgraded the financial sector, noting that he prefers it, along with healthcare and large technology firms. Year to date, financials and healthcare have shown gains, while the technology sector has declined.