Why Barclays is the latest Wall Street bank to slash its outlook on stocks

Toss another big Wall Street bank on the list of those becoming more cautious on stocks after a volatile start to the year.

Barclays strategist Venu Krishna slashed his 2025 S&P 500 (^GSPC) price target to 5,900 from 6,600 on Wednesday, citing tariffs and “deteriorating” economic data. The S&P 500 currently sits at 5,822, down about 2.3% year to date.

The estimate cut reflects Barclays’ expectation that S&P 500 companies will have reduced earnings power in large part due to tariffs from the Trump administration.

Krishna cut his views on the economically sensitive Consumer Discretionary and Industrials sectors to Negative from Neutral.

“We think it will be tough for stocks to work versus deteriorating consumer sentiment, lower growth, higher inflation and tariffs,” Krishna wrote. “Industrials look expensive versus history and are exposed to both trade policy and tenuous manufacturing PMI amid factories front-running tariffs and government contract cancellations.”

Read more: What Trump’s tariffs mean for the economy and your wallet

Barclays upgraded its outlook on Financials to Positive from Neutral, citing the potential for deregulation this year after tariff issues are settled.

The investment bank follows the likes of Goldman Sachs in cutting its S&P 500 price target this month.

It also arrives on the heels of Wall Street growing more concerned about the economy.

JPMorgan strategist Bruce Kasman raised eyebrows last week by calling out a 40% recession probability for this year. This is the second-highest recession probability on the Street behind BCA Research’s veteran forecaster Peter Berezin — he’s called a 75% chance.

Goldman Sachs’ chief economist Jan Hatzius said on Monday he thinks the market will be negatively surprised by tariffs should they go into effect on April 2 as the Trump administration suggested.

A bear roars against a white background.
Barclays cut its S&P 500 price target to 5,900 from 6,600 on Wednesday. · through-my-lens via Getty Images

Meanwhile, a wobbly economy also continues to play out in the data.

Spending at US retailers last month was much weaker than expected, per the latest retail sales report. This is on top of weakness in consumer confidence data and various Fed activity surveys.

Big companies Delta (DAL), FedEx (FDX), and Nike (NKE) have warned on near-term demand trends this month.

“We have to be realistic,” former director of the National Economic Council and current IBM vice chair Gary Cohn said on the Opening Bid podcast (video above). “The market came into the year on relatively all-time highs.”

“Ambiguity is the No. 1 enemy of a market,” the Goldman Sachs alum Cohn added. “When a company creates ambiguity in their earnings profile, in their growth profile, in their business model, the market will punish that stock. When politicians, legislators create ambiguity in the way that taxes are going to work, the way that capital gains are going to work, the way that they’re going impose tariffs, they create ambiguity to a market and the market as a whole reprices.”

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