Citi: Raises S&P 500 Year-End Target, Tax Cuts Expected to Offset Negative Impact of Tariffs

On August 11, Jin10 reported that Citigroup strategists raised their target for the S&P 500 index, stating that tax cuts should be able to offset the negative impact of tariffs on U.S. companies. The team led by Scott Chronert increased the year-end target for the index from 6,300 points to 6,600 points, implying that the index will rise about 3% from last Friday’s close. This quarter’s earnings reports have exceeded expectations, and there has been little visible negative impact from tariffs on performance, driving the stock market to new highs this month. Data from some institutions show that over 81% of S&P 500 constituent companies reported earnings above expectations, the highest level in seven quarters. The Citigroup team stated that companies are not only “performing well” but most also maintain expectations for performance in the second half of the year. Therefore, the consensus expectation for earnings per share is being raised. They raised their earnings per share forecast for S&P 500 constituent companies in 2025 from the previous $261 to $272, and the forecast for 2026 from $295 to $308. They noted that the higher earnings forecasts would not significantly affect valuation assumptions. They expect the index to rise to 6,900 points by mid-2026, an increase of about 8% from current levels.