PULSE Monitor: Earnings Get An Asterisk

Research evidence excerpt

PULSE Monitor: Earnings Get An Asterisk

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

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

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 6846cases imply increasing downside skew risk as the index works higher

(US Equity Strategy - Earnings Strength Drives Target Revision). Dec 2026 E 8100 7521

Our Q3 sector recommendations shift back to broadening. Strength in

S&P 500 EPS (TTM) Citi Consensus **the AI trade has been front and center, but tactically, we are taking this

opportunity to reduce our Info Tech recommendation to Market Dec 2024 246

Weight. We favor cyclical broadening via Consumer Discretionary, Dec 2025 276

Industrials, and Materials Overweight calls. Defensives are generally

Dec 2026 E 350 353Underweight given the absence of recessionary conditions, specifically

Consumer Staples. Communication is also Underweight (US Equity Dec 2027 E 400 403

Strategy - SIGN (Sector & Industry Group Navigator): Back to

Broadening).

Market action is starting to feel narrower again. Price momentum has Major US Index Performance, 1 Year (Rebased to 100)

been a focus because of strong relative performance. However, we are 135

uncomfortable with the factor given an increasing volatility. Therefore, 130

we suggest taking profit in price momentum to refocus on areas that 125

also have strong fundamental trends. Thematically, this leads us to our

Positive ROE Trend and Beat-and-Raise+ baskets, CGRBGROE and