Citigroup downgrades US equities, cuts S&P 500 target below 6000 on tariff concerns

(Reuters) - Citigroup downgraded its stance on U.S. equities and slashed its S&P 500 index target for this year as it expects tariff uncertainty to hurt corporate America's earnings.

Citi joined a string of brokerages, including Goldman Sachs and BofA, in slashing their benchmark index target below the 6000 mark.

Citi's current year-end target stands at 5800, below its previous estimate of 6500, while it also cut the index's earnings-per-share(EPS) projection to $255 from $270.

"Both tariff assumptions and recent signs of macro slowing trigger the downward revision...(and)some valuation compression is also warranted as a function of policy uncertainty," said Citi analysts in a note late last week.

President Trump's constantly evolving tariff policy, including his recent 90-day pause on most imports and exemptions for certain Chinese products, have prompted uncertainty in the financial markets.

In a separate note on Monday, the Wall Street brokerage cut its view on U.S. stocks to "neutral" from "overweight" amid elevated valuations and mounting downgrade pressures.

"The drivers of "exceptionalism" are fading, both from a GDP and EPS perspective. Tariffs, as they stand, could negatively impact US EPS the most," Citigroup said, adding that global recession concerns "abating for now, but risks remain."

The brokerage also upgraded Japan equities to "overweight" from "underweight," and downgraded emerging markets equities to "underweight" from "neutral". Citi also upgraded UK equities to "overweight".

On the global equity strategy front, Citi's preferred growth sector is technology, for cyclical sector it is financials, and its preferred defensive is health care.

(Reporting by Siddarth S and Joel Jose in Bengaluru; Editing by Varun H K and Tasim Zahid)