Barclays raises S&P 500 target price

- Target price increase:

- Barclays has raised the target price for the S&P 500 index for 2024 from 5,300 to 5,600.

- Reasons for increase:

- Reflects a slight premium to the fair value of the index excluding the technology sector.

- Expectations that inflation will continue to normalize.

- Expectation that the economy will remain resilient.

- Earnings growth in the technology sector:

- Large technology companies will maintain their leadership in earnings growth.

- A 34x multiple for Big Tech is considered a reasonable valuation.

- Despite Big Tech's 35% year-to-date price return, the P/E ratio remains well below its post-Covid peak thanks to strong earnings and upward revisions.

- Long-term outlook:

- Barclays sets a 2025 price target for the S&P 500 at 6,500.

- The bank's team believes the current consensus for 2025 earnings is overly optimistic.