Citi joins Goldman in lifting US stock outlook

Citi joins Goldman in lifting US stock outlook
The global banking giant expects continued strength in big tech stocks to keep fueling the benchmark S&P 500.
JUN 17, 2024
By  Bloomberg

Gains in the shares of American technology giants are likely to keep pushing the S&P 500 Index to new highs, says Citigroup Inc.’s Scott Chronert.

The bank’s US equity strategist boosted his year-end forecast for the stock benchmark on Monday, to 5,600 from 5,100. He cited continued strength in the so-called Magnificent Seven stocks and expectations for earnings growth to extend to other S&P 500 companies. The index rose about 1% Monday, on pace for its 30th record close this year, with Apple Inc. among the leaders.

Citigroup is the third firm since Friday’s close to lift its forecast for the gauge, joining Goldman Sachs Group Inc. and Evercore ISI as US stocks keep climbing to records. The trio are now among the most bullish on Wall Street, projecting an advance of some 2% or more from current levels, while the average forecast calls for a decline.

“The weighting effect of the mega-cap growth cohort is exerting an outsized influence on index price action,” Chronert wrote in a note to clients. The traditional measures to set targets, based on the macroeconomic backdrop, seem “inappropriate,” he said.

Strength in the economy and corporate earnings, and optimism that the Federal Reserve will reduce interest rates this year, have once again spurred a chase among Wall Street forecasters to keep up with a rally that left their forecasts in the dust early in 2024. 

At around 5,480 on Monday, the S&P 500 is up around 15% this year, and is well above the average year-end target of 5,275.18 for strategists tracked by Bloomberg. That’s even after a wave of firms ratcheted up their calls. Some, like Goldman and UBS Group AG, have done so as often as three times. The rush to turn bullish echoes last year, when the S&P 500’s double-digit return caught Wall Street prognosticators off guard.

Chronert and his team also raised their estimate for the index’s per-share earnings in 2024 to $250 from $245, while initiating a 2025 estimate of $270. Citigroup published mid- and full-year S&P 500 targets for next year of 5,700 and 5,800, respectively.

“Inherent in these targets is an assessment of three influences: Nvidia Corp., other Magnificent Seven stocks, and the remainder of the index,” they said, adding that valuations can hold into year-end but are likely to compress in 2025. An index tracking the Magnificent Seven stocks — Amazon.com Inc., Nvidia, Apple, Microsoft Corp., Alphabet Inc., Tesla Inc. and Meta Platforms Inc. — is up 37% this year.

Citigroup’s upgrade comes after Evercore’s Julian Emanuel raised his year-end S&P 500 forecast to 6,000 on enthusiasm over artificial intelligence, in an about-face from his previous target of 4,750, which called for a correction before 2024 closes out.

On Friday, Goldman’s chief US equity strategist, David Kostin, boosted the firm’s year-end S&P 500 target for a third time, a month after he said he saw no room for upside in the benchmark. JPMorgan Chase & Co. has the gloomiest outlook for the gauge at 4,200, implying a drop of more than 20% from the current level.

Latest News

Fintech bytes: FP Alpha rolls out estate insights feature
Fintech bytes: FP Alpha rolls out estate insights feature

Also, wealth.com enters Commonwealth's tech stack, while Tifin@work deepens an expanded partnership.

Morgan Stanley, Atria job cut details emerge
Morgan Stanley, Atria job cut details emerge

Back office workers and support staff are particularly vulnerable when big broker-dealers lay off staff.

Envestnet taps Atria alum Sean Meighan to sharpen RIA focus
Envestnet taps Atria alum Sean Meighan to sharpen RIA focus

The fintech giant is doubling down on its strategy to reach independent advisors through a newly created leadership role.

LPL, Evercore welcome West Coast breakaways
LPL, Evercore welcome West Coast breakaways

The two firms are strengthening their presence in California with advisor teams from RBC and Silicon Valley Bank.

Supreme Court slaps down brokerage's appeal vs. FINRA expulsion case
Supreme Court slaps down brokerage's appeal vs. FINRA expulsion case

The high court's decision rebuffing Alpine Securities marks a setback for a broader challenge to Wall Street's reliance on self-regulatory organizations.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave

SPONSORED The evolution of private credit

From direct lending to asset-based finance to commercial real estate debt.