US Stock Market: Barclays, Stifel lift S&P 500 year-end targets on stronger earnings outlook

Barclays and Stifel have raised their year-end targets for the S&P 500 index to 7,800, reflecting growing confidence in corporate earnings and the resilience of U.S. equities, according to a report by Reuters.

The revised target implies an upside of about 4.4% from the S&P 500’s last close. The benchmark index has gained 9.2% so far this year, supported by optimism surrounding artificial intelligence (AI) and improved investor sentiment following the U.S.-Iran peace agreement.

The upgrades add to a series of increasingly bullish forecasts from Wall Street brokerages, with some strategists expecting the index to surpass the 8,000 level. However, concerns remain over persistent inflation and a robust U.S. labour market, which have fuelled expectations that the U.S. Federal Reserve could keep interest rates elevated or raise them further, potentially weighing on equity valuations.

According to Reuters, Barclays said the outlook for equities remains constructive, although future gains are expected to depend more heavily on sustained earnings growth and continued AI-related capital spending as the prospect of monetary policy support diminishes.

The brokerage raised its 2026 earnings-per-share forecast for the S&P 500 to $337 from $321 and also introduced a 2027 index target of 8,800. Barclays said improved visibility in technology-sector earnings and a stronger industrial backdrop were helping offset concerns about softer consumer spending, though it maintained a negative stance on the consumer sector due to lingering spending and borrowing cost risks.

Barclays revised its sector recommendations by downgrading financials to “neutral” while upgrading healthcare to “neutral.”
Separately, Stifel also lifted its year-end target for the benchmark index to 7,800, citing stronger corporate earnings as the key driver for further market gains. The brokerage expects market leadership to broaden beyond the largest technology companies, pointing to signs that investors are increasingly rotating into equal-weight indices.

Stifel’s strategists favour investment in cyclical sectors, including energy, industrials, materials, as well as select semiconductor and computer hardware companies, reflecting their view that the U.S. economy continues to exhibit solid momentum.