Analysts at Barclays have joined a growing chorus of financial experts revising their projections for the S&P 500 index downwards for the current year. Citing the considerable ambiguity surrounding the Trump administration’s proposed tariffs and their potential ramifications for the U.S. economy, Barclays has lowered its year-end target for the benchmark index to 5,900, a significant reduction from its previous forecast of 6,600. This adjustment implies a modest growth of less than 1% from the S&P 500’s 2024 closing level, a stark contrast to the over 23% surge experienced in the prior year. This revision underscores the increasing anxiety within the financial community regarding the potential economic headwinds stemming from trade policy uncertainty, aligning with similar adjustments made by Goldman Sachs and RBC Capital Markets in recent weeks.
The shadow of potential tariffs cast by the Trump administration continues to loom over Wall Street, prompting Barclays analysts to become the latest to revise their outlook for the S&P 500 index. Citing the pervasive uncertainty surrounding these planned trade measures and their anticipated impact on the U.S. economic landscape, the investment bank has significantly lowered its year-end target for the benchmark equity index.
Barclays now projects the S&P 500 to reach 5,900 by the close of the year, a substantial downward adjustment from their earlier forecast of 6,600. This revised target suggests a tepid growth of less than 1% from the index’s final standing in 2024 at 5,881.63. This relatively subdued projection stands in stark contrast to the robust performance of the S&P 500 in the previous year, which saw a remarkable surge of just over 23%, setting numerous record highs along the way.
The index experienced a broad decline of 1.2% on Wednesday afternoon, reflecting the prevailing market apprehension.
Analysts Highlight “Significant Uncertainty” of Tariffs Impacting Projections
In their analysis, Barclays experts emphasized the considerable ambiguity surrounding future trade policy, stating, “Given significant uncertainty around trade policy, our bull and bear case [earnings per share] estimates hinge upon the final scope and severity of tariffs.”
The analysts further elaborated that their updated target for the stock index “assumes that earnings take a hit but valuations gradually recover as some tariffs are put in place, stifling growth and modestly boosting inflation but ultimately stopping short of pushing the US into an outright recession.”
Their base-case scenario anticipates “no further escalation” of trade tensions with China and posits that the Trump administration’s objectives with tariffs on Canada and Mexico are “primarily political” in nature, suggesting the possibility of future rollbacks.
Examining specific sectors, the Barclays analysts offered a more optimistic view on financial stocks, upgrading their rating from neutral to positive. This upgrade is predicated on the potential for the administration’s focus to shift from tariffs towards deregulation, which could benefit the financial industry. Conversely, they downgraded their outlook on discretionary and industrial stocks. The rationale behind this downgrade is that tariffs could negatively impact retail profits and dampen consumer spending, while also harming the industrial sector through potential government spending cuts.
The analysts at Barclays join their counterparts at Goldman Sachs and RBC Capital Markets, who have also lowered their growth projections for the S&P 500 in 2025 earlier this month, citing the same primary concern: the uncertainty that tariffs are injecting into the economic outlook. This growing consensus among major financial institutions underscores the significant apprehension surrounding the potential consequences of the administration’s trade policies on corporate earnings and overall economic expansion.