Citigroup's latest heavyweight report shook the market, announcing a significant reduction in the year-end target level of the S&P 500 index from 6500 points to 5800 points, a decrease of up to 10.8%. This is another Wall Street giant warning about the prospects of the US stock market, following Goldman Sachs and Bank of America. Citigroup also downgraded its rating on the US stock market from "overweight" to "neutral" and bluntly stated that "the myth of American corporate profits is being shattered". This series of bearish actions indicates a fundamental shift in Wall Street's attitude towards the US stock market.

Tariff 'nuclear bomb' strikes, causing comprehensive reduction in corporate profits

Citigroup analysts clearly pointed out in the report that the Trump administration's policy of imposing tariffs will become a "nuclear weapon" to strike corporate profits. The bank lowered its earnings per share (EPS) forecast for the S&P 500 index from $270 to $255, a decrease of 5.6%. The report emphasizes that "the current tariff policy will have the greatest impact on the profits of American companies." What is even more worrying is that Citigroup believes that the market has not fully priced this risk and may face more severe valuation compression in the future.

The disillusionment of the 'American exceptionalism' and the launch of a global capital shift

The Citigroup report directly points out that the "American exceptionalism" that supported the long-term rise of the US stock market is crumbling. With the slowdown in GDP growth and weak profit growth, funds are being massively withdrawn from the US stock market. In sharp contrast, Citigroup has upgraded its rating on the Japanese stock market from "underweight" to "overweight", indicating that Wall Street is restructuring its global asset allocation. Analysts warn that this massive transfer of funds may have just begun, and the selling pressure on US stocks will continue to intensify.

Major reshuffle of sector configuration, with defense strategy becoming mainstream

While being bearish on the US stock market, Citigroup also provided investment advice in times of crisis: technology stocks are preferred in growth sectors, financial stocks are favored in cyclical sectors, and healthcare stocks are recommended in defensive sectors. This allocation strategy reflects that institutional investors are shifting towards a more conservative investment style. It is worth noting that Citigroup has downgraded its rating on emerging market stocks from 'neutral' to 'underweight', indicating that global risk assets may face a systemic reassessment.

Summary: The tranquility before the storm? Investors need to fasten their seat belts

Citigroup's report is like a warning bell, indicating that the US stock market may undergo a deep adjustment. Under the triple pressure of tariff impact, profit correction, and valuation compression, the long-standing bull market in the US stock market is facing its most severe test. As Wall Street's major banks collectively turn bearish, retail investors need to be more vigilant about the risk of severe market volatility. History has shown that when mainstream institutions begin to unanimously lower their target levels, it often means that a bigger storm is brewing. In this time of uncertainty, staying vigilant may be the best investment strategy.