BREAKING NEWS
Barclays boosts S&P 500 target on strong US economy, Big Tech profits.
In summary, Barclays has increased its year-end 2024 target for the S&P 500 stock index to 5,300 from 4,800, citing the resilience of the U.S. economy and strong earnings from “Big Tech.” This new target represents a 4.5% upside to the index’s closing price on Monday. The decision is based on the belief that inflation will normalize, the economy will remain relatively resilient, and Big Tech will continue to lead in earnings growth.
Barclays raised its S&P 500 earnings estimate for the full year 2024 to $235 per share from $233, attributing the improvement to considerably better estimates for Big Tech. The strategists at Barclays highlighted the significant influence of Big Tech on the U.S. equity market, stating that the bull and bear cases for the S&P 500 revolve around the performance of Big Tech.
According to Barclays, strong earnings from Big Tech could propel the index to 6,050, while disappointing results, coupled with a weakening economic backdrop, could bring the index down to 4,500. The strategists believe that the risk/reward balance leans toward the bull case, as macroeconomic data indicates a higher likelihood of economic re-acceleration compared to the probability of a mild recession.
Barclays is one of several brokerages that have increased their S&P 500 target prices amid the index’s strong performance in the early months of 2024, with a gain of over 6% and reaching record highs.
Table: Barclays S&P 500 Target and Earnings Estimates
| Metric | Previous Estimate | Updated Estimate |
|---|---|---|
| S&P 500 Year-End Target (2024) | 4,800 | 5,300 |
| S&P 500 Earnings Estimate (2024) | $233 per share | $235 per share |
Frequently Asked Questions (FAQ):
- Why did Barclays raise its S&P 500 target?
- Barclays increased its target due to the resiliency of the U.S. economy and strong earnings from Big Tech, expecting inflation normalization and sustained economic resilience.
- What is the impact of Big Tech on the S&P 500?
- Big Tech significantly influences the S&P 500, with the bull and bear cases centered on this sector. Strong Big Tech earnings could drive the index to 6,050, while disappointing results may lead to a drop to 4,500.
- How does Barclays view the risk/reward balance for the S&P 500?
- Barclays believes the risk/reward balance favors the bull case. They suggest that macroeconomic data supports the likelihood of economic re-acceleration, outweighing the probability of a mild recession.
- What is Barclays’ rationale for the increased earnings estimate?
- Barclays raised the full-year 2024 S&P 500 earnings estimate to $235 per share from $233, citing considerably improved earnings estimates for Big Tech, which positively impact the overall S&P 500 earnings.
Conclusion:
Barclays’ decision to raise its year-end 2024 S&P 500 target to 5,300 from 4,800 reflects optimism in the face of a resilient U.S. economy and robust earnings from Big Tech. The strategists believe that inflation will normalize, and Big Tech will continue to drive earnings growth, influencing the overall performance of the index. With a positive outlook, Barclays sees the risk/reward balance tilted toward the bull case, suggesting the potential for further market growth. This adjustment aligns with a broader trend among brokerages, with many raising their S&P 500 target prices amid the index’s strong start in 2024 and record-high achievements.