Key facts
- Barclays lifted its year-end target for the S&P 500 index to 7,950.
- The new target represents a 3.6% increase from the index's previous close.
- Barclays also raised its 2026 earnings-per-share forecast for the S&P 500 to $365.
- The brokerage downgraded the utilities sector to "neutral" from "positive" citing regulatory uncertainties.
Barclays has raised its year-end target for the S&P 500 index to 7,950 from 7,800, citing a strong second-quarter earnings season led by technology companies. The revised target is approximately 3.6% higher than the index's last closing price.
U.S. corporate earnings have surpassed expectations, with 86% of the 492 S&P 500 companies that have reported results exceeding analysts' estimates, a significant increase from the long-term average of 67.5%. Barclays attributes this momentum to AI investment and robust economic activity.
Despite these positive trends, Barclays maintains a conservative stance on valuations due to concerns about the sustainability of AI spending, persistent inflation, geopolitical uncertainties, and a more hawkish interest rate outlook. The benchmark index has still managed a 12.1% gain this year.
The brokerage also increased its 2026 earnings-per-share forecast for the S&P 500 to $365 from $337. However, Barclays downgraded the utilities sector to "neutral" from "positive," citing regulatory uncertainties, including wildfire liability reform and opposition to data center permitting.
Other financial institutions are also bullish on the index. HSBC recently raised its year-end target, and UBS Global Research, Goldman Sachs, and Citigroup project the S&P 500 will finish the year at or above 8,000.
Discussion