JPMorgan Chase, Citi Say One Asset Will Outperform S&P 500 as EY Warns Traders Have ‘Unwarranted Optimism’ in US Stocks: Report

Banking giants JPMorgan Chase and Citi believe that one foreign stock market index will outshine the S&P 500 (SPX) this year as investors seek alternatives to US assets.

In a new Bloomberg survey involving 20 market strategists, both JPMorgan and Citi predict that the Stoxx Europe 600 Index (SXXP) will outperform the S&P 500 for the remainder of 2025, driven by an improving economic outlook in the EU.

Among the polled analysts, JPMorgan has the highest target for SXXP, predicting that the Stoxx Europe 600 Index will soar to a high of 580 points in the coming months. At the same time, the bank forecasts a decline for the S&P 500.

Meanwhile, Citi expects SXXP to surge to 570 points this year as the market gets more clarity on corporate earnings.

Says Citigroup strategist Beata Manthey,

“If we have already moved past peak earnings uncertainty, this could set the stage for additional upside and potential multiple re-rating, especially among more beaten-up cyclical sectors.”

The SXXP is a stock market index that tracks the performance of the 600 largest publicly traded firms across 17 European nations. As of Friday’s close, the Stoxx Europe 600 Index is trading at 545 points, up about 7.60% year-to-date.

The banks’ outlook comes as Big Four accounting firm Ernst & Young (EY) warns that the S&P 500 is rallying without pricing in the potential negative impacts of tariffs, reports Yahoo! Finance.

In an investor note, EY chief economist Gregory Daco says that tariffs will likely pressure household demand by driving prices up. He also expects the US economy to lose momentum and approach “stall speed” in the fourth quarter of 2025, forecasting a year-over-year GDP growth of just 0.6%.

“Equity markets have reacted with unwarranted optimism, overlooking the persistent economic drag posed by elevated tariffs.”

As of Friday’s close, the S&P 500 is trading at 5,802 points.

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