Barclays cuts S&P 500 2020 target, says it’s ‘too early to buy the dip’


Traders function on the floor of the New York Stock Exchange, January 27, 2020.

Spencer Platt

Barclays slashed its S&P 500 concentrate on for 2020 as the coronavirus throws the world supply chains into chaos. The financial institution also expects U.S. companies to see an earnings decrease this yr.

The bank now sees the S&P 500 to conclusion the yr at 3,000, down from a prior forecast of 3,300. The fairness benchmark tumbled additional than 10% this 7 days by yourself to 2,978 as of Thursday’s close. A lot more losses were being predicted Friday likely by right away futures.

“Even if the virus is completely contained in brief get, the repercussions of the shock to the Chinese financial state that has already occurred to the relaxation of the environment will not be insignificant,” Maneesh Deshpande, head of equity derivatives approach at Barclays, mentioned in a observe Friday. “We imagine it is too early to invest in the dip given that the repercussions from COVID-19 are likely to incredibly undesirable or mildly undesirable.”

Barclays also cut its S&P 500 earnings estimates to $162 for every share this 12 months, symbolizing a 2% fall in gains. The connect with is even a lot more pessimistic than Goldman Sachs’ outlook on Thursday, which stunned the sector. Goldman said it sees zero earnings expansion for American organizations in 2020.

“The fall in EM financial growth on your own would guide to 2020 SPX earnings development of ~ -2%, with the ripple by to other economies reducing it further,” Deshpande extra.

The forecast is significantly a lot more bearish than the consensus forecast of Wall Road, which still calls for earnings to rise 7.7% this yr, according to Refinitiv facts as of Thursday.

Shares are on pace for its worst 7 days due to the fact the economical crisis as coronavirus fears keep on to rattle the markets. The Dow plummeted just about 1,200 factors on Thursday — its greatest a person-day place drop ever — closing in correction territory alongside with the S&P 500 and Nasdaq Composite.

“The magnitude of the drop in economic activity is tracking in direction of the far more critical state of affairs outlined by our economists,” Deshpande stated.

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