(Reuters) -Barclays on Wednesday became the latest brokerage after Goldman Sachs and RBC Capital Markets to slash its year-end target for the benchmark S&P 500 index, due to uncertainty arising from U.S. President Donald Trump’s tariff policies.
Barclays expects the S&P 500 index to be at 5,900 from 6,600, after Trump’s sweeping moves roiled global financial markets and spooked investors, with the benchmark U.S. index down about 1.8% so far this year, after a stellar 2024.
Recent survey data also showed U.S. business activity picked up in March, but growing fears over import tariffs and deep government spending cuts continued to weigh on sentiment and prospects for the rest of the year.
“Our base case 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,” said Barclays strategists led by Venu Krishna.
Trump has imposed a raft of tariffs on imported goods on its top trading partners including Canada, Mexico and China since his return to the White House, with some duties delayed until next month.
Barclays’s base case for tariffs assumes “no further escalation of China tariffs, Trump’s aims for Canada and Mexico tariffs are primarily political” and reciprocal tariffs amount to 5% on rest of the world.
It also slashed the index’s earnings-per-share estimate to $262 from $271.
The brokerage upgraded the U.S. financials sector to ‘positive’ from ‘neutral’ on robust near-term earnings momentum.
Barclays downgraded the consumer discretionary sector to ‘negative’ from ‘neutral’ on deteriorating consumer sentiment, lower growth, higher inflation and tariffs.
It also downgraded industrials sector to ‘negative’ from ‘neutral’ on potential pressures from trade policies.
Goldman Sachs and RBC trimmed their year-end index targets earlier this month, citing uncertainty from tariffs.
(Reporting by Siddarth S in Bengaluru; Editing by Shilpi Majumdar and Shailesh Kuber)
