Barclays on Tuesday raised its 2024 target for the S&P 500 to 5,600 from 5,300 previously as it expects strong profit growth at big technology companies to continue.
The bank joins peers including Citigroup and Goldman Sachs in raising its annual target for the S&P 500, hoping for a "soft landing" for the U.S. economy and expecting the Federal Reserve to cut interest rates later this year.
In February this year, Barclays raised its 2024 target for the index to 5,300 points, pointing to the resilience of the US economy and strong earnings of big technology companies.
The S&P 500 has hit a record high this year, boosted by enthusiasm for artificial intelligence (AI) and expectations of multiple interest rate cuts from the Federal Reserve through 2024. The index closed at 5,564.41 on Monday, up 16.6% so far this year.
Barclays also raised its 2024 earnings per share (EPS) forecast for the index companies to $241, from $235 previously. Barclays strategists said in a statement:
“Despite our high valuation assumptions for large-cap tech companies, growth-adjusted multiples are reasonable and we expect large-cap tech companies to gain on valuations.”
Barclays said the "Big Seven" companies like Apple (AAPL) and Nvidia (NVDA) will continue to report strong earnings, but slowing inflation will put pressure on earnings for other S&P 500 components, although the impact will be smaller.
Meanwhile, the bank said it expects utilities earnings growth to outpace the rest of the S&P 500, giving it a "positive" stance on the sector.
Article forwarded from: Jinshi Data