U.S. Stock Performance Outlook Downgraded Amid Tariff Concerns
Analysts at Barclays reduce forecasts for the S&P 500, citing economic slowdown and tariff impact.
Analysts at Barclays have downgraded their projections for U.S. stock performance this year, positioning themselves among the most pessimistic on Wall Street during an already volatile period for the market.
In a note published on Wednesday, Venu Krishna, Barclays' chief U.S. equity strategist, revised the target level for the S&P 500 from 6,600 points to 5,900 by the end of 2025.
Krishna also lowered the earnings-per-share estimate to $262 from $271, reflecting a projected increase of only 2.5% from Tuesday's closing level.
He stated that the base case assumes earnings will be negatively impacted, with tariffs contributing to a notable slowdown in U.S. economic activity, albeit not reaching full recession levels, allowing for gradual recovery in valuations.
Additionally, Krishna upgraded the rating on financial stocks from neutral to positive, while downgrading the ratings on consumer discretionary and industrial stocks from neutral to negative.
The U.S. stock market is currently facing significant volatility, exacerbated by remarks from President Trump regarding tariffs on foreign imports.
Amid these disruptions, major financial institutions have recently reduced their forecasts for the S&P 500 for 2025. Goldman Sachs lowered its year-end prediction to 6,200 points from 6,500, while Yardeni Research cut its best-case scenario estimate to 6,400 points from 7,000.
The economic landscape has been affected by President Trump's protectionist trade policies, which have eroded consumer and business confidence in the United States, raising fears of a potential recession.
Amid these concerns, attention has returned to a historical indicator measuring economic stress, known as the 'misery index', which has recently climbed from a five-year low.
The index, a combination of inflation and unemployment rates, stood at 6.9 in March.
Although this figure is lower than its peak during the pandemic, when it reached approximately 15, it remains higher than readings from a decade ago.
The misery index was originally designed decades ago to aid the White House in better understanding economic data, and recent updates provide a straightforward means of assessing current conditions and consumer sentiments, according to Steve Hanke, an applied economics professor at Johns Hopkins University.
In a recent report, a financial news outlet noted that in this tense environment, investors are contending with a complex mix of economic and political factors, with interest rate trajectories and trade policy decisions playing crucial roles in determining market direction in the near term.
The U.S. stock market has experienced a rapid decline in recent weeks, with data indicating the S&P 500 has entered a correction phase, down more than 10% from its record high set on February 19. The market has lost over $4 trillion in value, amid significant declines in key stocks such as Nvidia and Tesla.
In a note published on Wednesday, Venu Krishna, Barclays' chief U.S. equity strategist, revised the target level for the S&P 500 from 6,600 points to 5,900 by the end of 2025.
Krishna also lowered the earnings-per-share estimate to $262 from $271, reflecting a projected increase of only 2.5% from Tuesday's closing level.
He stated that the base case assumes earnings will be negatively impacted, with tariffs contributing to a notable slowdown in U.S. economic activity, albeit not reaching full recession levels, allowing for gradual recovery in valuations.
Additionally, Krishna upgraded the rating on financial stocks from neutral to positive, while downgrading the ratings on consumer discretionary and industrial stocks from neutral to negative.
The U.S. stock market is currently facing significant volatility, exacerbated by remarks from President Trump regarding tariffs on foreign imports.
Amid these disruptions, major financial institutions have recently reduced their forecasts for the S&P 500 for 2025. Goldman Sachs lowered its year-end prediction to 6,200 points from 6,500, while Yardeni Research cut its best-case scenario estimate to 6,400 points from 7,000.
The economic landscape has been affected by President Trump's protectionist trade policies, which have eroded consumer and business confidence in the United States, raising fears of a potential recession.
Amid these concerns, attention has returned to a historical indicator measuring economic stress, known as the 'misery index', which has recently climbed from a five-year low.
The index, a combination of inflation and unemployment rates, stood at 6.9 in March.
Although this figure is lower than its peak during the pandemic, when it reached approximately 15, it remains higher than readings from a decade ago.
The misery index was originally designed decades ago to aid the White House in better understanding economic data, and recent updates provide a straightforward means of assessing current conditions and consumer sentiments, according to Steve Hanke, an applied economics professor at Johns Hopkins University.
In a recent report, a financial news outlet noted that in this tense environment, investors are contending with a complex mix of economic and political factors, with interest rate trajectories and trade policy decisions playing crucial roles in determining market direction in the near term.
The U.S. stock market has experienced a rapid decline in recent weeks, with data indicating the S&P 500 has entered a correction phase, down more than 10% from its record high set on February 19. The market has lost over $4 trillion in value, amid significant declines in key stocks such as Nvidia and Tesla.
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