by Sagarika Jaisinghani
The 4.5% rally in US stocks this year is likely as good as it gets for now due to risks from President Donald Trump’s policy proposals, according to Citigroup Inc. strategists.
The team led by Scott Chronert said investors are betting Trump’s America-First policies would have a “pro-business” impact. “We don’t disagree but also argue that related policy disruptions to fundamentals may not yet be priced in,” they wrote in a note.
“There is no significant change to our full-year views, but we see slightly more near-intermediate term downside risk,” rather than the potential for an advance from Trump’s policy effects, the strategists said.
After rallying more than 20% last year, US stocks have trailed their global counterparts in 2025 on concerns that Trump’s protectionist agenda and proposed import tariffs could stoke inflation. The president has threatened levies on everything from automobiles, semiconductors, pharmaceuticals and lumber, as well as reciprocal tariffs on key trading partners.
Investors have also questioned lofty valuations for technology heavyweights. Four of the so-called Magnificent Seven — Apple Inc., Telsa Inc., Alphabet Inc. and Microsoft Corp. — have declined so far this year, with only Meta Platforms Inc., Amazon.com Inc. and Nvidia Corp. advancing. The cohort’s contribution to earnings growth has also slowed from a peak in late 2023.
Chronert said the “impetus” was now on the rest of the S&P 500 index to drive gains. There are signs of the rally broadening beyond big tech, but that’s so far been constrained to other large caps, he wrote.
The strategist proved correct in his bullish call last year, which was underpinned by a rally in the Magnificent Seven. For 2025, he has a year-end target of 6,500 points for the benchmark index — implying gains of about 6% from Wednesday’s close.
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