Market tuning out tariffs and tax bill and that will continue in second half, Barclays says
Stocks have been shaking off threats from tariffs and tax policy as of late – and they're likely to continue doing so, according to Barclays. Markets are poised to stop constantly responding to President Donald Trump's tariff policy and the "One Big Beautiful" tax bill making its way through Congress, the bank said. Instead, traders' attention will shift to macro economic data and the role of artificial intelligence in driving corporate growth. "In our view, financial markets will increasingly tune out tariff and tax headlines coming from Washington, DC," Ajay Rajadhyaksha, the bank's global chairman of research, wrote to clients in a Thursday note. "The focus should turn instead to macro data and the extent to which the AI dividend will boost corporate earnings, especially for large tech firms." .SPX YTD mountain The S & P 500 in 2025 Rajadhyaksha said tariffs should hit the world economy in the second half of the year. While investors should expect weak growth, he said the U.S. should be able to avoid a recession. The levies should push U.S. core inflation above 3%, he said, which will keep the Federal Reserve from making any changes to interest rates during its next few policy meetings. Despite the concerns around tariffs roiling trade and consumer trends, Rajadhyaksha said the world economy should get through this situation "relatively unscathed." For the tax bill, Rajadhyaksha said he does not expect it to pass Congress before the July 4 deadline. However, he said it should be approved by lawmakers before their August recess and it will likely look similar to the House's version of the bill. After a choppy run over recent months, the S & P 500 is now closing in on new all-time highs as the end of the first half of the year nears. The broad index is now up more than 4% in 2025.
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