Barclays Strategist Venu Krishna on S&P Target, Tariffs, and 10-Year Rates

Barclays' Revised S&P Year-End Price Target

• 🎯 Barclays has raised its S&P year-end price target from 5,900 to 6,050, a move following similar adjustments by other financial institutions.
• ⚠️ This revision does not return the target to the beginning of the year's estimate of 6,600, but reflects an incremental increase.

Impact of Tariffs on Earnings

• 📈 The primary driver for the revised target is the easing of trade uncertainty, with the understanding that tariffs are likely to remain in some form.
• 📊 Barclays has developed a detailed framework for investors to understand the dollar impact of various tariff scenarios on S&P earnings, country by country.
• 📉 The initial January target of 6,600 did not fully incorporate the impact of tariffs on earnings estimates, as there was an expectation of negotiation.

2026 Outlook and Earnings Projections

• 🚀 For 2026, Barclays anticipates a normalization of the market, with earnings expected to rebound by approximately 9%.
• ⚠️ The outlook for 2026 includes the spillover effects of sticky inflation, moderating growth, and some weakness in consumption patterns.
• 📊 Barclays' 2026 earnings per share estimate is 285, which is below the consensus of 301, while their 2025 estimate is 262, close to the consensus of 264.

Valuation and Key Risks

• 💡 Valuations for the S&P 500, excluding big tech, are trading around 20 times earnings, considered fair value based on inflation, economic growth, and 10-year interest rates.
• 💻 Big tech is trading closer to 27 times forward earnings, with Barclays using a multiple of 28, acknowledging their consistent upside surprises.
• ⚠️ The biggest risk to valuations is identified as the movement of 10-year interest rates; rising rates pose a significant threat to current valuations.