Citi: Raising the year-end target for the S & P 500 index, tax cuts are expected to offset the negative impact of tariffs

Strategists at Citigroup raised their target for the S & P 500 index and said tax cuts should offset the negative impact of tariffs on US companies. The team led by Scott Chronert raised its year-end target for the index to 6,600 from 6,300, implying that the index will be up about 3% from Friday's close. Better-than-expected earnings for the quarter and little negative impact from tariffs have been seen, driving stocks to record highs this month. According to institutional data, more than 81% of S & P 500 companies beat expectations, the highest level in seven quarters. The Citi team said that companies not only "performed well", but also mostly maintained their expectations for second-half results. As a result, the market's consensus expectations for earnings per share are being raised. They raised their 2025 earnings per share forecast for S & P 500 companies to $272 from $261 previously and their 2026 forecast to $308 from $295. They said the higher earnings forecast would not have a significant impact on valuation assumptions. They expect the index to rise to 6,900 by mid-2026, up about 8 percent from current levels.