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  • Writer's pictureRealFacts Editorial Team

Citi’s Bullish Vision for the S&P 500

Scott Chronert

This week, Scott Chronert, head of U.S. equity strategy at Citi Bank, points out that a few top-performing stocks have contributed significantly to this year’s index gains. Specifically, the top 10 contributors account for about 75% of the total gain, with the top 20 contributing 85%. Despite this, Chronert notes that 122 stocks have outperformed the index, and more than 60% of the index has seen positive returns this year.

Chronert has revised Citi’s year-end target for the S&P 500 upwards to 5,600, marking a substantial 10% increase from their previous estimate of 5,100. This adjustment reflects Citi’s optimistic outlook on sustained earnings strength among the top-performing stocks known as the ’Magnificent Seven,’ which have been driving significant gains in the index. Citi, among the most bullish on Wall Street, anticipates a strong 17% gain for the S&P 500 from its current levels. Chronert attributes this positive forecast to solid earnings visibility expected in the medium term for the Magnificent Seven stocks, projecting these leaders to maintain their current market valuations. Notably, Nvidia’s outstanding performance has been particularly influential, contributing over 4% to the S&P 500’s year-to-date increase. However, Chronert also highlights the uneven participation across the broader market, with the remaining 493 S&P 500 constituents yet to demonstrate comparable growth in their earnings per share forecasts.

Looking ahead while expressing confidence in the overall market’s fundamental strength, Chronert identifies potential challenges for the latter half of 2024 and into 2025, including geopolitical uncertainties, upcoming U.S. elections, and the pressure on companies to exceed earnings expectations consistently. He acknowledges the likelihood of a market pullback ranging from 5% to 10% in the year’s second half and advises investors to navigate such downturns strategically. Additionally, he points to promising growth prospects in generative AI as a positive counterbalance amid potential market volatility. In conclusion, Citi’s revised S&P 500 forecast reflects a bullish stance driven by strong earnings prospects among leading stocks. Chronert’s nuanced perspective underscores the importance of adopting a balanced investment strategy that recognizes growth opportunities and underlying risks in the evolving market environment.


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