As the U.S. gears up for the presidential inauguration on January 20, 2025, investor sentiment is being shaped by Citi's recent downgrade of the S&P 500 outlook. The downgrade, from +2 to +1, reflects concerns over rising tariff uncertainties and potential inflationary pressures. Citi's Global Asset Allocation report suggests that while the U.S. economy is poised to outperform, the equities' risk/reward profile is less favorable compared to 2024. Analysts highlight the potential impact of broad tariffs on global growth and inflation, with the Federal Reserve possibly delaying rate cuts until May to manage these risks. Despite these challenges, Citi remains optimistic about U.S. small caps and sectors like tech and banks, which could benefit from potential deregulation.
The SPDR S&P 500 ETF (SPY) rose 0.80% to $596.38 at 10:00 AM on Friday, January 17.