Another major Wall Street bank has joined the list of those growing more cautious about the stock market following a turbulent start to the year.
A Barclays strategist, Venu Krishna, has lowered his 2025 S&P 500 price target from 6,600 to 5,900 due to concerns about tariffs and weakening economic data. The current value of the S&P 500 is 5,822, marking a 2.3% decline since the beginning of the year.
The decision to reduce the estimate reflects Barclays' belief that S&P 500 companies will face decreased earnings potential primarily because of tariffs imposed by the Trump administration. Krishna has downgraded his outlook on the Consumer Discretionary and Industrials sectors to Negative from Neutral, predicting challenges for stocks amidst declining consumer sentiment, sluggish growth, rising inflation, and tariff pressures.
Barclays has upgraded its outlook on Financials to Positive from Neutral, anticipating a positive shift following regulatory changes once tariff matters are resolved. This move aligns with other financial institutions like Goldman Sachs, which have also lowered their S&P 500 price targets in recent times, reflecting a broader sense of apprehension among Wall Street analysts about the economy.
JPMorgan's strategist, Bruce Kasman, has raised concerns over a 40% probability of a recession this year, echoing the growing unease within the financial sector. Notably, experts like Peter Berezin from BCA Research have even predicted a 75% chance of a recession.
The uncertain economic conditions are reflected in recent data, including disappointing retail sales figures and weakening consumer confidence. Large corporations like Delta, FedEx, and Nike have also issued warnings about a downturn in near-term demand.
Amidst this backdrop, former National Economic Council director and current IBM vice chair, Gary Cohn, emphasized the importance of clarity in the market. He highlighted that market performance suffers when there is ambiguity in corporate earnings, growth projections, or government policies like tariffs.
In summary, the financial sector is adopting a more cautious stance due to escalating trade tensions, weakening economic indicators, and the looming threat of a recession, underscoring the need for clearer economic and trade policies to restore market confidence.