The S&P 500 (SPX) is setting the stage for another year of double-digit returns, powered by continued AI momentum, lower interest rates, and strong earnings growth, according to Citi. The firm set its 2026 price target for the index at 7,700, implying upside of 12.7% from Friday’s close.
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“While the AI emphasis is expected to be persistent, the evolution will likely follow a perceived winner versus loser dynamic,” said strategists at Citi.
Citi Expects Volatility in 2026 amid Stretched S&P 500 Valuations
Citi has a bull case price target of 8,300 and a bear case target of 5,700. It expects the index to generate earnings per share (EPS) of $320, higher than the consensus estimate of $310, and trade at a price-to-earnings (P/E) multiple of 24x. The index currently trades at a forward P/E of 23x.
As with 2025, Citi urges investors to expect periods of volatility in the new year and warns that the S&P 500’s historically high valuation creates a “hurdle for the market.”
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