The third-largest US bank by assets reportedly expects the S&P 500 to surge by as much as 16% from current levels if the economy achieves certain conditions.
Citigroup analysts see the S&P 500 hitting 7,000 by the end of the year in a bull-case scenario, reports Barron’s.
According to the analysts, a boom related to artificial intelligence (AI) and a “goldilocks” setting for the US economy, powered by sustainable growth, low inflation and low unemployment, could act as catalysts for a stock market rally.
The Citigroup analysts say,
“The AI trade seems to be gaining renewed momentum as we move further past DeepSeek. Capex spend continues to support future growth while stock-buyback activity reflects strong cash flows and confident managements.”
The S&P 500 index ended trading on Tuesday at 6,038 points, about 2% below the all-time high of 6,166 points reached in February.
Citigroup has also upgraded the base case year-end target for the S&P 500 index from 5,800 points, the megabank had assigned in mid-April, to 6,300 points.
In their bear-case scenario, the Citigroup analysts have set a downside target of 5,200 points for the S&P 500 index, per the report. Such an outcome could arise as a result of a mild recession caused by the tariffs the US government has put in place.
The Citigroup analysts say,
“Concerns regarding consumption trends, policy implications on rates/currency, with negative economic read-through risk, all remain to be navigated.”
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