The S&P 500 (SPX) has shed 5% over the past month as the U.S.-Iran war and the closure of the Strait of Hormuz have raised investor anxiety, fueled higher oil prices, and intensified inflation fears. However, Barclays believes that investors should climb “the wall of worry.”
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“The fundamentals, including US earnings and a cyclical investment cycle, are stronger than current sentiment implies,” wrote strategist Ajay Rajadhyaksha in a note to clients.
Barclays Lifts 2026 S&P 500 Price Target to 7,650
Rajadhyaksha added that bonds are pricing in an end to the war in a few weeks, while market price action suggests that a de-escalation will come sooner rather than later. In addition, he believes that the U.S. has “severely depleted Iran’s military capability.”
Earlier this week, Barclays went against the pack and raised its year-end S&P 500 price target to 7,650 from 7,400 and its EPS estimate to $321 from $305, boosted by strong corporate fundamentals and technology acting as a “secular growth engine.”