(Reuters) – Barclays (LON:BARC) raised its 2025 forecast for the S&P 500 index on Monday to 6,600 from 6,500, on the back of a resilient U.S. economy, gradual decrease in inflation and robust potential earnings growth of mega-cap technology stocks.
The revised forecast represents an upside of 10.56% from the index’s close of 5,969.34 on Friday and 10% from Barclays’ estimate of 6,000 for 2024.
“For U.S. equities, we think macro positives outweigh the negatives heading into next year,” analysts at Barclays wrote in a note.
The U.S. Federal Reserve is expected to continue its monetary policy easing cycle, while the uncertainty post the U.S. election has been resolved and jobless rate remains low, Barclays said, which could together boost the benchmark index.
Last week, both Goldman Sachs and Morgan Stanley (NYSE:MS) forecast the index could touch 6,500, banking on continued growth in the U.S., stronger corporate earnings and the Fed’s rate-cut path.
Big Tech companies will continue to drive S&P 500 earnings, said Barclays which raised the benchmark index’s earnings-per-share estimate to $271 from $268.
“We expect most sectors to be impacted by disinflationary margin pressure and slowing ex-US growth in 2025, while Big Tech continues offsetting to the upside,” Barclays noted.
Barclays also upgraded the U.S. industrial and health sectors while downgrading consumer staples and utilities.