Catenaa, Monday, August 11, 2025- Citigroup raised their target for the S&P 500 Index to 6,600 for year-end, saying tax cuts should offset the negative impact from tariffs on US companies.
The team led by Citigroup Strategist Scott Chronert increased its year-end target for the equity index to 6,600 points from 6,300, as the index stood at 6,387 on Monday morning.
According to Bloomberg Intelligence, a better-than-expected earnings season, with little evidence of the harmful impact of tariffs on results, has spurred stocks to fresh records this month. Over 81% of S&P 500 companies have beaten estimates, the highest in seven quarters.
Companies have produced “an impressive beat,” while also mostly sticking with their projections for the second-half of the year, the Citi team said. As a result, consensus views on earnings per share are moving higher.
The Citi strategists raised their EPS estimates for S&P 500 members for 2025 to $272 from $261 previously, and for 2026 to $308 from $295.
The higher profit forecasts trigger no material changes to valuation assumptions, they wrote. They see the index rising to 6,900 by mid-2026, an advance of some 8% from here.
While most megacaps have already reported, the next big test for the season will be Nvidia’s earnings on Aug. 27.
The Citi strategists noted that the artificial intelligence-influenced/Magnificent 7 cohort continues to demonstrate impressive earnings visibility, but expect the rally to broaden out, similar to market developments last year. That said, they recommend investors “keep an eye” on cyclical and macro-economic drivers.
“The bevvy of the first-half policy-related distortions is gradually being priced into earnings expectations,” Chronert and his team said. “The path higher for the S&P 500 will require the mega cap growth leadership to hold, with continued broadening across sectors to augment the price action.”
