Barclays has lowered its S&P 500 forecast for 2025, marking the lowest prediction among major firms. This is due to trade tariffs and their impact on corporate earnings.
Target Reduction and Causes
Barclays has cut its 2025 S&P 500 target from 6,600 to 5,900 points due to the impact of new U.S. trade tariffs on corporate earnings and overall economic growth. The new forecast suggests only a 0.3% upside from the start of the year. The primary reasons for the downgrade include new tariffs on products from Canada, Mexico, and China.
Recession Risks and Economic Data
Market turbulence has increased due to mixed economic signals. The U.S. consumer confidence index showed a 12-year low in income and job expectations. Meanwhile, U.S. treasury yields have risen, signaling fears of a recession. A CNBC CFO Council survey reveals that over half of financial officers predict a recession in the second half of 2025.
Current Market Situation
Decreasing liquidity and market volatility add challenges for large trades. Despite a grim forecast, sectors like finance and healthcare may perform well. Markets are also reacting to GameStop's share price increase following its investment in bitcoin, a move similar to MicroStrategy's previous actions.
Barclays' forecast reduction serves as a key warning for investors regarding potential economic risks. Experts continue to monitor the situation and assess the impact of tariffs on the U.S. economy.
