Citi concerned of US indices rising amid weakening profits and trade risks

US stock indices have reached all-time highs despite worsening economic conditions and downward revisions to corporate earnings forecasts. Kate Moore, a Citi analyst, expressed concern about the current market situation.

According to her, analysts at the beginning of the year projected 13% earnings growth for the S&P 500 companies, but by mid-year this estimate was revised down to 7.1%. Meanwhile, the index's growth is being driven by just a few large technology companies such as Nvidia, Microsoft, and Meta. Other companies are failing to demonstrate similar results.

Moore also noted that investors are underestimating the impact of tariffs on businesses. In her view, globalization previously contributed to margin expansion, and new trade barriers could produce the opposite effect. As she emphasizes, the anticipated interest rate cuts that many expect might be driven not only by receding inflation but also by an overall economic slowdown, which would negatively affect the stock market.