(Reuters) -Barclays on Wednesday raised its 2025 year-end target for the S&P 500 to 6,450 from 6,050, its second in three months, on stronger-than-expected corporate earnings, resilient U.S. economic
Barclays and Deutsche Bank Boost S&P 500 Year-End Predictions
Market Outlook and Predictions
By Rashika Singh and Akriti Shah
Bank Upgrades and Economic Factors
(Reuters) - Barclays and Deutsche Bank raised their year-end targets for the S&P 500 on Wednesday, citing stronger corporate earnings, resilient U.S. economic growth and optimism around artificial intelligence.
Labor Market and Federal Reserve Implications
Deutsche Bank increased its target to 7,000 from 6,550, while Barclays raised its forecast to 6,450 from 6,050.
Corporate Earnings Resilience
The index touched a record high of 6,555.97 earlier on Wednesday and has risen 11.2% so far this year.
Expectations for Rate Cuts
Barclays and Deutsche Bank join a spate of banks that recently upgraded their view on the U.S. stock market despite lingering concerns about President Donald Trump's tariffs on the economy and corporate earnings.
"We expect equity valuations to remain elevated by historical standards, driven by higher payout ratios, perceptions of higher trend earnings growth...and earnings resilience with fewer significant drawdowns," says Binky Chadha, analyst at Deutsche Bank.
The S&P 500 has rallied more than 30% from its April lows, buoyed by resilient earnings and investor enthusiasm around the AI boom.
"Corporate earnings are solid and global GDP growth is stabilizing, but US labor market risks are worsening," say Barclays strategists, whose target suggests the S&P could end the year just below current levels.
Data on Friday showed U.S. job growth weakened sharply in August and the unemployment rate rose to a near four-year high of 4.3%.
Signs of a cooling labor market and tame inflation have increased expectations of U.S. Federal Reserve rate cuts this year and next, further supporting equities.
Barclays expects three rate cuts before year-end, which it says will help offset labor market weakness.
In addition, it lifted its 2026 target for the S&P 500 to 7,000 from 6,700.
Investors will be closely watching the Fed's policy meeting next week for clues on the rate cut path and broader market direction.
(Reporting by Rashika Singh and Akriti Shah in Bengaluru; Editing by Janane Venkatraman and Krishna Chandra Eluri)
