Stocks in Translation Why Wall Street strategists are slashing their S&P 500 targets
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Apr 17, 2025 
Venu Krishna, Barclays' head of US equity strategy, shares insights on the evolving market landscape. He sheds light on how policy uncertainties, especially concerning tariffs and immigration, have led Barclays to lower their S&P 500 targets. The episode delves into the implications of these shifts, discussing how they affect market sentiment and risk assessment. Additionally, Krishna explores the delicate balance between tech stocks and economic factors, highlighting AI's potential to drive future growth amidst uncertainties.
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Policy Uncertainty Shakes Market Optimism
- Market optimism about earnings growth has reversed due to rising policy uncertainty, especially around tariffs and immigration.
- Initially, the market focused on pro-growth policies but underestimated the impact of trade and immigration policies.
Lowered S&P 500 Targets Reflect Uncertainty
- Barclays cut their S&P 500 year-end target from 6600 to 5900 as their base case.
- There remains a meaningful chance of downside to 4400 if earnings contract significantly.
Derivatives Market Adjusts to Tariff Risks
- The derivatives market initially underpriced the risk of tariff events, failing to anticipate the disruption.
- Implied volatility on S&P options has since risen, reflecting increased tariff-related uncertainty.