Barclays Raises 2024 S&P 500 Target to 5,600
Barclays has announced an increase in its 2024 target for the benchmark S&P 500 index to 5,600 from 5,300. This decision comes as the brokerage anticipates strong profit growth for mega-cap technology firms. The move by Barclays follows similar actions taken by other financial institutions such as Citigroup (NYSE:C) and Goldman Sachs (NYSE:GS), who have also raised their annual targets for the index. These optimistic forecasts are based on hopes of a “soft landing” in the U.S. economy and the expectation of an interest rate cut from the Federal Reserve later this year.
In February, Barclays had previously raised its 2024 target for the index to 5,300, citing the resilience of the U.S. economy and the robust earnings reported by Big Tech firms. The current enthusiasm surrounding artificial intelligence (AI) and the increasing likelihood of a Fed rate reduction in 2024 have propelled the S&P 500 to record highs this year. As of Monday, the index closed at 5,564.41 points, marking a 16.6% increase year-to-date.
Barclays has also revised its 2024 earnings per share (EPS) forecast for index companies, now projecting $241 compared to the previous estimate of $235. The brokerage’s strategists noted, “While our valuation assumption for Big Tech is high, growth-adjusted multiples are reasonable and we expect the group to earn into its valuations.”
Despite the positive outlook for major tech stocks, such as the Magnificent 7 which includes Apple and Nvidia, Barclays cautioned that disinflation could put pressure on earnings for the remaining components of the S&P 500, albeit to a lesser extent. Additionally, Barclays expressed a favorable view on the utilities sector, expecting higher earnings growth compared to other S&P 500 stocks.
Footnotes:
– https://finance.yahoo.com/news/barclays-raises-2024-p-500-130654375.html