PULSE Monitor: A Hawkish Start

Research evidence excerpt

PULSE Monitor: A Hawkish Start

Our Stance on US Equities

We lift our base case year-end 2026 target for the S&P 500 to 8100. Citi Estimates vs. Consensus/Market Pricing

This is predicated on a big step up in earnings expectations where we

S&P 500 Price Target Citi Market Pricing *now project $350 and $400 for 2026/2027 index level earnings. We

allow for some multiple compression relative to our prior forecasts as Dec 2024 5882

the AI-triggered growth phase is clearly well underway. Our bull/bear Dec 2025 6846

cases imply increasing downside skew risk as the index works higher Jun 2026 E 7200 7418

(US Equity Strategy - Earnings Strength Drives Target Revision). Dec 2026 E 8100 7556

Market action is starting to feel narrower again. Price momentum has

S&P 500 EPS (TTM) Citi Consensus **

been a focus because of strong relative performance. However, we are

Dec 2024 245uncomfortable with the factor given an increasing volatility. Therefore,

we suggest taking profit in price momentum to refocus on areas that Dec 2025 276

also have strong fundamental trends. Thematically, this leads us to our Dec 2026 E 350 341

Positive ROE Trend and Beat-and-Raise+ baskets, CGRBGROE and Dec 2027 E 400 395

CGRBLBRP <Index> on Bloomberg respectively (Rotation Opportunity:

From Price Momentum to Fundamental Trends).

Q2 SIGN takes us down a more disperse industry path. Overweights

include Information Technology, Health Care, and Materials. Staples, Major US Index Performance, 1 Year (Rebased to 100)

Communications, Industrials, and Energy are key underweights. Within 150

Technology, we prefer Semiconductors and Hardware versus Software.

ancials move to Market Weight, but Banks remain overweight versus 140

inancial Services underweight. Generally, valuations have improved 130