• Citi lifts year-end S&P 500 target to 6,600 from 6,300, citing tax benefits from the proposed "One Big Beautiful Bill."
  • Earnings forecasts rise to $272 for 2025 and $308 for 2026, up from $261 and $295.
  • Strategist Scott Chronert expects tax relief to offset potential tariff impacts, supporting U.S. equities.

A Constructive Outlook for U.S. Equities

Citi has taken a more bullish stance on the S&P 500, raising its year-end target to 6,600 from 6,300, according to strategist Scott Chronert. The revision reflects expectations that corporate tax benefits from the proposed "One Big Beautiful Bill" will more than offset potential headwinds from tariffs. The bank also lifted its earnings per share (EPS) forecasts for the index to $272 in 2025 and $308 in 2026, up from $261 and $295 previously.

The upgrade hinges on the anticipated passage of the legislative package, which could deliver material tax relief for corporations. While tariffs remain a risk—particularly for trade-sensitive sectors—Citi’s analysis suggests that the net effect of policy changes will be positive for after-tax profits. "The tax benefits are expected to provide a meaningful boost to earnings, outweighing the drag from tariffs at the index level," Chronert noted in the report.

Policy-Driven Earnings Resilience

Citi’s revised EPS path underscores a broader narrative of U.S. large-cap earnings resilience, driven by policy tailwinds and productivity gains. The bank’s $272 forecast for 2025 and $308 for 2026 now sit above consensus estimates, positioning Citi among the more optimistic voices on Wall Street. The outlook assumes that tax provisions in the bill will be implemented as envisioned, though legislative delays or dilution could introduce downside risk.

Market reaction will likely track progress on the bill, with any signs of momentum validating the higher EPS path. Conversely, persistent tariffs could create sectoral dispersion, favoring domestically oriented firms over those reliant on imports. "We see the tax-versus-tariff dynamic as a key driver of earnings growth in the coming years," Chronert added.

Watching for Street-Wide Revisions

Citi’s move may prompt other banks to revisit their S&P 500 targets and earnings models as policy clarity evolves. Strategists across Wall Street are expected to weigh in with their own adjustments, particularly if the bill advances through Congress. For now, Citi’s upgraded outlook offers a bullish signal for investors betting on continued strength in U.S. equities.