Citi Ceo Visits Mexico President During Banamex Stake Talks

Reuters

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Dj Arm Stock Is Rising. The Chip Designer Has Tripled Its Market, This Analyst Says. - Barrons.Com

Reuters

Advanced Micro Devices

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Citigroup’s bullish bet: S&P 500 target raised to 6,600 driven by AI, tax cuts

Invezz

Citigroup

+1.29%

Citigroup raised its year-end S&P 500 target from 6,300 to 6,600, signaling that they believe the market still has room to grow in 2025.

That’s roughly a 3% jump from where the index closed around 6,389. They’re counting on recent policy changes and market developments to give corporate earnings a real lift going forward.

The big reason behind Citi’s more optimistic forecast is the tax and spending bill signed on July 4, 2025.

It offers broad corporate tax cuts and makes employee benefits more permanent, which Citi analysts say will help lift corporate profits over the next few quarters.

They also believe that tariff-related challenges especially from the US-China trade back-and-forth have mostly been priced in and won’t drag on earnings as much going forward.

Tech-led market surge

Since hitting a low on April 8, 2025, right after President Trump’s “Liberation Day” tariffs, the S&P 500 has jumped around 32%.

This rally has been driven mostly by strong earnings from the so-called “Magnificent Seven” tech giants, which have led the charge, while other parts of the market are starting to pick up steam too.

Recently, over 81% of S&P 500 companies beat earnings expectations, the highest in seven quarters which gives Citi more confidence that earnings growth can keep going.

Citigroup has also bumped up its earnings per share (EPS) forecasts for the S&P 500 to $272 for 2025 and $308 for 2026, up from earlier estimates of $261 and $295.

They see better profits ahead thanks to tax reforms and solid business fundamentals.

Even though the index is trading near the high end of its usual valuation range, Citi thinks the S&P 500 can hold a forward price-to-earnings ratio around 21 times, thanks in part to a shift toward growth sectors like tech and AI.

Cautious optimism ahead

Scott Chronert from the bank says a few things coming together like tariffs easing, solid earnings reports, ongoing AI investments, and some helpful tax changes have raised hopes for better earnings growth in the second half of 2025.

On top of that, new trade deals with big partners like the EU and Japan have helped boost the market’s mood.

In the best-case scenario, Citi thinks the S&P 500 could climb as high as 7,200 points if companies keep beating earnings expectations and the economy and politics don’t throw any big curveballs.

This guess is based on continued AI-driven progress, big stock buybacks by companies, and steady economic growth even with some uncertainty around policies.

That said, there are still risks like shifting policies, interest rate questions, budget problems, currency moves, and global tensions.

So, the message is to stay cautiously hopeful. Still, the market’s strong run since April and better-than-expected earnings have pushed Citi to raise its expectations.

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BofA Says Record Number of Investors See Stocks Overvalued

Bloomberg

(Bloomberg) -- A record share of fund managers see US stocks as too expensive after the sharp rally since April lows, according to a monthly survey by Bank of America Corp.

About 91% of participants indicated that American stocks are overvalued, the highest ever proportion in data going back to 2001. While investor allocation to global equities climbed to the highest since February, a net 16% were still underweight the US, the poll showed.

Overall sentiment improved to the most bullish in six months, since before President Donald Trump’s sweeping tariffs roiled financial markets and stoked worries about a recession. BofA strategist Michael Hartnett said investors now see the lowest probability of a hard landing since January.

US stocks have scaled record highs on signs of a better-than-expected corporate earnings season and optimism that the Federal Reserve will lower interest rates as economic growth slows. That’s prompted market forecasters including at Citigroup Inc. to turn more optimistic about the S&P 500’s trajectory in the second half.

Still, some strategists such as BofA’s Hartnett have warned the rally risks overheating into a bubble given a potential easing in both monetary policy and financial regulation. The bank’s August survey showed cash levels as a percentage of total assets remained at 3.9%, a level that is consistent with a so-called sell signal for stocks.

Hedge funds sold a net $1 billion in US stocks last week, while long-only investors bought $4 billion, according to data from Goldman Sachs Group Inc.

Meanwhile, focus remains on the Fed as Trump exerts pressure on the central bank in his demand for lower rates. About 54% of participants said they expect the next chair to resort to quantitative easing or yield curve control to ease the US debt burden. Jerome Powell is scheduled to step down as chair in May.

Other highlights from the poll, which was conducted from July 31 to Aug. 7 and canvassed 169 participants with $413 billion in assets:

About 68% said a soft landing is the most likely outcome for the global economy in the next 12 months; 22% say no landing, and just 5% predict a hard landing
A net 49% say EM stocks are undervalued, most since February 2024
Inflation expectations rose to a three-month high, with a net 18% expecting a higher reading of the global consumer price index
Biggest tail risks: trade war triggers global recession (29%), inflation prevents Fed rate cuts (27%), disorderly rise in bond yields (20%), AI equity bubble (14%), dollar debasement (6%)
Most crowded trades: long Magnificent Seven (45%), short dollar (23%), long gold (12%)

--With assistance from Alice Gledhill and Jan-Patrick Barnert.

(Adds data on hedge funds from sixth paragraph.)

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BofA Poll Shows Record Number of Investors Say Stocks Overvalued

Bloomberg

(Bloomberg) — A record share of fund managers see US stocks as too expensive after the sharp rally since April lows, according to a monthly survey by Bank of America Corp. (BAC).

Other highlights from the poll, which was conducted from July 31 to Aug. 7 and canvassed 169 participants with $413 billion in assets:

About 68% said a soft landing is the most likely outcome for the global economy in the next 12 months; 22% say no landing, and just 5% predict a hard landing
A net 49% say EM stocks are undervalued, most since February 2024
Inflation expectations rose to a three-month high, with a net 18% expecting a higher reading of the global consumer price index
Biggest tail risks: trade war triggers global recession (29%), inflation prevents Fed rate cuts (27%), disorderly rise in bond yields (20%), AI equity bubble (14%), dollar debasement (6%)
Most crowded trades: long Magnificent Seven (45%), short dollar (23%), long gold (12%)