Strategists led by Beata Manthey said global equities have gained about 12% so far in 2026 and remain close to record highs. The MSCI All-Country World Index is on track for a fourth straight year of double-digit gains, yet Citi says it remains in the “resilience” camp rather than viewing the move as outright complacency.
Earnings Remain the Main Support
Citi’s bullish case starts with profits.
The bank’s U.S. equity team raised its 2026 S&P 500 target to 8,100 earlier this year and projected earnings of $350 per share in 2026 and $400 in 2027. Citi also expects market leadership to broaden beyond the original group of AI winners as earnings revisions improve across more sectors.
That is important because the latest market breadth has been much weaker than headline index levels suggest. Mega-cap technology stocks have been doing a disproportionate amount of the work, while many individual S&P 500 members remain well below their highs.
Citi nevertheless expects AI investment to remain a structural earnings driver into 2027, while stronger cyclical participation could make the next leg of the rally less dependent on only a handful of companies.
Higher Yields Still Threaten the Rally
The biggest challenge remains the bond market.
The 10-year Treasury yield recently climbed above 5.3%, its highest level in more than two decades. Higher yields raise corporate borrowing costs and make bonds more competitive with stocks, particularly expensive growth shares.
That pressure has already tested U.S. equities repeatedly, although strong earnings have so far prevented a deeper pullback.
Citi’s global economic team still expects growth of about 2.8% in 2027, with AI investment helping offset pressure from energy prices and tighter monetary policy.
