Vanguard S&P 500 ETF (VOO), which tracks the S&P 500, is trading lower today as geopolitical tensions tied to the Iran conflict continue to build. The situation has pushed oil prices higher, raising concerns that inflation could remain sticky for longer than previously expected, which in turn clouds the outlook for interest rate cuts and puts pressure on equities across the board.
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That weakness is showing up in high-growth areas, particularly within tech, where some of VOO’s largest holdings are pulling back. Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) are down about 1.9%, 1.4%, and 1.9%, respectively.
Yet, despite the near-term turbulence, Citi strategist Scott Chronert does not see the current environment as a signal that the broader uptrend has run its course. Chronert characterizes the market as “a persistent but volatile bull,” a view that captures both the resilience of the cycle and the reality that the path forward is unlikely to be smooth.
Chronert’s outlook rests on the idea that earnings growth can continue to provide a foundation for equities, even as macro risks accumulate. Citi’s base case calls for the S&P 500 to reach 7700 in 2026, a target built on what he describes as “aggressive $320 in index earnings which now appears conservative.” In a more optimistic scenario, the index could climb to 8300, supported by stronger earnings momentum and slightly higher valuations. The strategist does not ignore the downside, outlining a bear case of 5700 that reflects the potential for fundamental disappointment and multiple compression.
Importantly, Chronert points to a growing list of factors that could challenge the soft-landing narrative that markets have been leaning on. The Iran conflict represents the latest addition to that list, joining ongoing tariff uncertainty, concerns within private credit, and the broader implications of AI-driven disruption. Each of these elements has the potential to introduce volatility and complicate the economic outlook.
