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Market Analysis

Citi Forecasts Continued Upside for S&P 500 in Second Half of 2024
Amos Simanungkalit · 5.5K Views

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Citi analysts foresee continued upward momentum for the S&P 500 in the latter half of 2024, albeit at a slower rate compared to the first half of the year.

 

They highlighted that Nvidia (NASDAQ: NVDA) and other leading companies, dubbed the "Magnificent 7," have disproportionately driven the index's gains this year. Despite ongoing concerns about economic slowdown, analysts remain optimistic about the fundamental outlook for the remainder of the year.

 

Investment in generative AI has offset traditional macroeconomic worries significantly, according to analysts' insights. They expect this fundamental strength to carry forward into 2025, though they caution that the current consensus for next year may be overly optimistic.

 

Citi's year-end target for the S&P 500 in 2024 is set at 5,600 under its base case scenario, with bear and bull cases projecting 4,300 and 6,100, respectively. Looking ahead to 2025, their base projection stands at 5,800, potentially rising to 6,400 in a bullish scenario, while the bear case forecasts a level of 4,700.

 

The Magnificent 7 stocks have surged over 31% year-to-date and have contributed significantly to the S&P 500's 15.6% gain, accounting for 8.7 index points. However, other sectors have also shown robust performance in line with Citi's expectations for the year.

 

Sector-wise, mega-cap tech stocks and growth sectors have led performance, with cyclicals and defensive sectors also showing strong year-to-date gains, albeit at a slower pace compared to growth sectors.

 

Looking forward, Citi analysts anticipate broader earnings growth across various sectors. They underscore the importance of accurately predicting earnings trajectories for major contributors, which they deem crucial for index earnings projections.

 

Estimates indicate that the Magnificent 7 are expected to contribute $51.30 to the S&P 500's 2024 EPS, marking an $11 increase year-over-year in index EPS contributions.

 

 

 

 

Paraphrasing text from "Investing" all rights reserved by the original author.

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