By Reuters

(Reuters) - Barclays raised its 2026 year-end S&P 500 target on Tuesday, betting that strong corporate earnings led by ​the technology sector and resilient economic growth will outweigh rising ‌macro risks, including war in the Middle East, AI-driven disruption and stress emerging in private credit markets.

The British brokerage lifted its index target to 7,650 from 7,400, implying about 16.2% upside ​from Monday's close at 6,581.00.

Since the Iran war started, the S&P ​500 has fallen about 4.3%, as soaring oil prices and ⁠geopolitical uncertainty pressured risk assets and prompted investors to pull back ​from equities towards safe-haven assets.

"We believe the U.S. continues to offer stronger ​nominal growth than other major economies and a secular growth engine in technology that shows few signs of stopping," Barclays strategists said in a note.

"We are incrementally bullish ​on US equities, though the road likely stays bumpy until we ​turn a corner."

Barclays lifted its S&P 500 earnings per share estimate for 2026 to $321 ‌from $305, ⁠saying the forecast reflects a robust earnings base rather than a valuation re-rating.

Surging oil prices have revived inflation concerns and clouded the outlook for the U.S. Federal Reserve, which last week signaled only one rate ​cut for 2026.

The ​brokerage outlined a ⁠bear-case scenario of 5,900 for the index, warning that sustained higher oil prices could feed through to inflation ​and force the U.S. Federal Reserve into an "unenviable ​corner."

It also ⁠flagged rising redemption pressure in private credit funds as a risk that could trigger a sharper downturn if sentiment deteriorates.

Barclays also updated its U.S. ⁠sector calls, ​upgrading industrials to "positive" from "neutral" and raising materials ​and energy to "neutral" from "negative," citing improving industrial momentum, AI-linked capital expenditure support and benefits from ​higher energy prices.

Reporting by Rashika Singh in Bengaluru; Editing by Tasim Zahid

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