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Barclays analysts became the latest to cut their projection for the S&P 500 on Wednesday, citing the uncertainty around the Trump administration's tariffs and their potential impact on the U.S. economy.

The analysts now expect the index to rise to 5,900 this year, down from their previous forecast of 6,600, which would amount to growth of less than 1% from the 5,881.63 mark where it ended 2024. The S&P 500 surged just over 23% in 2024, setting a number of records along the way.

The index was down 1.2% Wednesday afternoon as stocks were broadly lower .

Analysts Say 'Significant Uncertainty' on Tariffs Affecting Projections

"Given significant uncertainty around trade policy, our bull and bear case [earnings per share] estimates hinge upon the final scope and severity of tariffs ," the analysts wrote.

The analysts said their new target for the stock index "assumes that earnings take a hit but valuations gradually recover as some tariffs are put in place, stifling growth and modestly boosting inflation but ultimately stopping short of pushing the US into an outright recession ."

They said their base case assumes "no further escalation" of tariffs with China and that the Trump administration's goals with tariffs on Canada and Mexico "are primarily political" and could be rolled back in the future.

Looking into specific industries, the Barclays analysts upgraded their view on financial stocks to positive from neutral, citing the potential for the administration's focus to shift from tariffs to deregulation. They also downgraded discretionary and industrial stocks, as tariffs could hurt retail profits and slow consumer spending while also hurting the industrial sector via government spending cuts.

The Barclays analysts follow others from Goldman Sachs and RBC Capital Markets who have lowered their estimates this month for the S&P 500 's growth in 2025, also citing the uncertainty tariffs are creating in the economy.

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