Stocks Remain Steady as Citi Increases S&P 500 Forecast
The stock market had a positive opening on Monday, showing resilience with a new forecast for the S&P 500 from strategists at Citigroup.
Summary
- On Monday, stocks showed mixed results, with major indices remaining near the flatline as investors looked for more opportunities for growth.
- Citigroup Inc. strategists have increased the S&P 500’s 2025 target to 6,600, with a mid-2026 estimate of 6,900.
The Dow Jones Industrial Average opened 67 points higher, while the S&P 500 gained 0.01% and the Nasdaq Composite remained flat.
Despite the overall flat performance, the optimistic opening positions Wall Street for a strong start to the week, with traders focusing on significant factors such as U.S. inflation data, tariffs, and geopolitical issues.
Citigroup raises S&P 500 target for 2025
In a bullish atmosphere, strategists at Citigroup anticipate that the S&P 500 Index will trend upwards. According to Citi, the index is expected to benefit from tax cuts, potentially mitigating the negative impact of tariffs.
Citigroup forecasts that the S&P 500 will reach 6,600 by year-end, reflecting a 3% increase from its previous week’s close of around 6,300. Positive earnings reports, with 81% of companies exceeding analyst expectations, serve as bullish indicators for the index.
Wall Street is witnessing gains despite the challenging tariff landscape, aided by significant deals and ongoing corporate resilience. Earnings per share estimates for the S&P 500 for 2025 have been revised up to $272, from a prior expectation of $261. Overall, the strategists predict an approximate 8% increase to 6,900 by mid-2026.
Tariffs, inflation data remain in focus
Short-term, investors are likely to focus on sector-specific tariffs affecting semiconductor and pharmaceutical imports, the geopolitical climate, and the upcoming Consumer Price Index data set for release on Tuesday. The Producer Price Index will follow on Thursday, with the retail sales report expected on Friday.
Additionally, interest rates are a critical factor in the market, with the Federal Reserve poised to increase rates in September. Fed governor Michelle Bowman, who previously dissented on keeping interest rates steady, anticipates three rate cuts in 2025.
Bowman warns that delaying cuts past December could jeopardize the labor market and further hinder the U.S. economy.