Citi's recent downgrade of the S&P 500 outlook from +2 to +1 has introduced caution among investors, primarily due to rising tariff uncertainties and potential inflationary pressures. As the U.S. gears up for a new presidential inauguration, the market is bracing for a potentially choppier 2025. Citi's Global Asset Allocation report suggests that while the U.S. economy is expected to outperform, the risk/reward profile for equities is less favorable compared to 2024. The report also notes that the Federal Reserve may delay rate cuts until May to manage inflation risks, adding another layer of complexity to the market dynamics.
The SPDR Portfolio S&P 500 ETF (SPLG) has responded to these developments, rising 0.79% to $70.15 as of 10:00 AM on Friday, January 17.