Shares of Citi and BlackRock Both Turn Green as Wall Street Grows Bullish on US Equities

TLDR

• Citi lifted its rating on US equities to “Overweight” from “Neutral,” pointing to improved valuations and earnings growth driven by the technology sector
• BlackRock has also upgraded US equities to overweight, citing stronger corporate earnings and limited macroeconomic harm stemming from the Iran conflict
• S&P 500 firms are forecast to post 12.6% profit growth in Q1, a figure that could climb to 19% if current earnings outperformance holds
• Tech sector profits are projected to grow 45% this year, with valuations at their lowest relative to other sectors since the middle of 2020
• Citi cut emerging markets to “Neutral” but lifted its year-end MSCI EM target from 1,540 to 1,770

(SeaPRwire) –   Both Citi and BlackRock have upgraded US equities to overweight, a move driven by resilient corporate earnings and signs that geopolitical risks from the Iran conflict may stay contained.

The rating changes come as the S&P 500 has bounced nearly 9% off the seven-month low it hit in late March. Markets have been shaken by the Iran conflict and swings in oil prices, but both firms now see a clearer path forward.

Citi strategist Beata Manthey said the upgrade is tactical rather than a long-term call. It reflects limited visibility following the US-Iran ceasefire and the US naval blockade of the Strait of Hormuz.

“We adopt a Quality/Defensive bias in our global equity strategy,” Manthey wrote, noting the allocation is tied to how geopolitical events unfold rather than a fixed medium-term view.

Citi said the US market has “derated” and now trades at a premium to other developed markets that is close to historical averages. That makes valuations more attractive after the recent market pullback.

The bank also flagged a key risk: global equities are still priced for earnings upgrades that may not materialize. Bottom-up consensus projects 20% global EPS growth in 2026, but Citi’s own top-down models point to just 16% growth.

Tech Earnings Fuel the Bull Case

A large share of both firms’ optimism rests on the technology sector. Citi estimates roughly 50% of all global earnings growth in 2026 will come from the tech sector alone.

Tech profits are expected to jump 45% this year. Despite that upbeat outlook, the sector has posted only modest gains so far this year, leaving valuations looking relatively cheap. BlackRock noted that IT valuations versus other sectors are at their lowest since mid-2020.

Overall S&P 500 companies are projected to report a 12.6% rise in Q1 profits, per FactSet. If the usual pattern of earnings beating estimates holds, that growth number could climb to 19%.

BlackRock said it re-entered risk assets after identifying two key signals: evidence of actions to reopen the Strait of Hormuz, and signs that the macro damage from the conflict would be contained.

“The threshold for the US and Iran to return to open conflict is high,” the firm said, which limits the risk of deeper economic harm.

Sector Adjustments and EM Positioning

Citi also made sector rating changes alongside its regional outlook calls. It upgraded global Materials to overweight, citing stronger earnings momentum and more attractive valuations. It cut Communication Services to underweight.

On emerging markets, Citi downgraded the region to “Neutral,” pointing to risks from energy shocks and currency pressure. The MSCI Emerging Markets index has fallen 2.8% since the conflict began.

Even so, Citi raised its year-end MSCI EM target to 1,770 from 1,540, signaling a more positive medium-term outlook for the region.

BlackRock kept both the US and emerging markets as its only overweight regions, with a focus on corporate profit margins during the current earnings season.

Citi’s price targets still imply upside by year-end, assuming the US-Iran conflict eventually winds down.