Citi strategist: US stocks may have reached a short-term peak

ChainCatcher news, Citigroup strategists indicate that due to the risks posed by Trump's policy proposals, the current 4.5% gain in U.S. stocks this year may already be the best short-term outcome.

The team led by Scott Chronert stated that investors are betting that Trump's "America First" policy will have a "favorable impact on businesses." "We do not oppose this, but we also believe that the potential damage to the fundamentals may not yet be priced in. Our outlook for the year has not changed significantly, but the near- to medium-term downside risks have slightly increased." The performance of U.S. stocks in 2025 lags behind global markets due to concerns that Trump's protectionism and proposed import tariffs may spur inflation. Investors are also questioning the high valuations of tech giants, with four of the seven giants (Apple, Tesla, Alphabet, and Microsoft) currently in decline. Compared to the peak at the end of 2023, the contribution of the seven giants to earnings growth has also slowed.

Chronert noted that the current momentum is coming from other parts of the S&P 500 index, with signs of the rally expanding beyond large tech stocks, but so far it has been limited to other large-cap stocks.