Ongoing earnings strength for the “Magnificent Seven” will continue to lead the S & P 500 higher, according to Citi. Scott Chronert, the bank’s head of U.S. equity strategy, increased his year-end S & P 500 target to 5,600 from 5,100. That is nearly a 10% raise and among the highest on Wall Street, according to the CNBC Market Strategist Survey. The new target implies the broad market index gaining 2.3% from where it closed Monday and a 17% gain. Citi is the third major firm in recent days to hike his forecast for the broad market. Goldman Sachs also increased its price target on the S & P 500 to 5,600 on Friday, while Evercore ISI raised its forecast to 6,000 — the highest on the Street. The strategist highlighted “solid earnings visibility” in the medium term for the Magnificent Seven stocks, which he believes will sustain the current index multiples. Chronert also noted that Nvidia’s tremendous rally has comprised an outsized component — more than 4% — of the S & P 500’s year-to-date gain. The S & P 500 is up more than 14% in 2024. .SPX YTD mountain SPX year to date “The index path higher thus far this year has been determined by a narrow cohort of stocks that have earned premium valuation status,” Chronert wrote in a Monday note. “The weighting effect of the mega cap growth cohort is exerting an outsized influence on index price action. As a result, traditional macro-determined target setting seems inappropriate. Rather, a S & P 500 index target needs to account for related influences.” Although Nvidia and the rest of the Magnificent Seven have shown ongoing positive revisions to their 2024 earnings estimates, the remaining 493 stocks in the S & P 500 have not yet shown a similar uptick to their 6% earnings per share growth forecast, according to Chronert. “Viewed differently, the top 10 contributors to the ytd index return account for roughly 75% of the gain, with [the] top 20 comprising 85%. Still, 122 stocks have outperformed the index, and over 60% of the index is positive for the year,” said Chronert. Despite confidence in the fundamentals of the broad market, Chronert believes the outlook for the second half of the year and 2025 is more mixed. He highlighted risk factors such as geopolitics, U.S. election outcomes and pressure for companies to continue to deliver a beat and raise during their quarterly earnings announcements. “Thus, the likelihood of a -5-10% pullback at some point during 2H is growing, and we want to be prepared to use such pullbacks opportunistically.,” said Chronert. “Of course, the bullish offset at work is what we describe as a broadening of the incremental growth opportunity unfolding from investment in generative AI.” For 2025, Chronert has his mid-year and full-year targets at 5,700 and 5,800, respectively.