On August 11, Citigroup strategists raised the target for the S&P 500 index and stated that tax cuts should be able to offset the negative impact of tariffs on US companies. The team led by Scott Chronert raised the year-end target for the index from 6,300 points to 6,600 points, suggesting that the index will rise approximately 3% from last Friday's closing.
This quarter's financial reports performed better than expected, with almost no negative impact from tariffs, driving the stock market to new highs this month. Institutional data shows that over 81% of S&P 500 index component companies' performance exceeded expectations, the highest level in seven quarters. The Citigroup team stated that companies not only "performed excellently" but also mostly maintained their expectations for performance in the second half of the year.
Therefore, the market consensus expectations for earnings per share are being raised. They raised the earnings per share expectations for S&P 500 index component companies from $261 to $272 for 2025, and from $295 to $308 for 2026. They stated that higher earnings forecasts would not significantly impact valuation assumptions. They predict that by mid-2026, the index will rise to 6,900 points, an increase of about 8% from the current level. (Jinshi)
