Citigroup Downgrades U.S. Stock Market Rating to Neutral Amid Global Trade Tensions – Coincu

On April 14, 2025, Citigroup stock strategists, led by Beata Manthey, downgraded the U.S. stock market from “overweight” to “neutral.”

The decision stresses the fading exceptionalism in the U.S. economy and global trade tensions impacting the U.S. market.

Citigroup Highlights U.S. Economic Challenges Affecting Stock Ratings

Citigroup has shifted its outlook on the U.S. stock market citing several influential factors. Beata Manthey and her team pointed out that the driving factors of the country’s economic exceptionalism are diminishing. As Manthey put it, “From a GDP and EPS perspective, the driving factors of the ‘exception theory’ are fading.” The downgrade reflects concerns over weakening GDP and earnings growth amid current market conditions.

Citigroup’s downgrade implies a less favorable environment for American stocks, driven by growing trade tensions and high valuations. This perspective advocates diversification towards non-U.S. equities, including potential investments in Europe and China.

Market reactions have been notable, with U.S. equity indices struggling to maintain momentum. Major statements from Manthey emphasize the pressing need for adaptation in investment strategies to mitigate potential risks.

Historical Patterns Suggest Global Diversification Strategy

Did you know? In past downgrades similar to 2018 and 2022, the U.S. market saw increased volatility, prompting investors to diversify globally.

Previously, critical assessments of the U.S. market have triggered increased volatility, leading to a global diversification of assets. This recent downgrade echoes past strategies that emphasized global engagement and adaptability to unfolding economic trends.

Experts highlight that European fiscal consolidation might pull capital from the U.S., favoring markets adopting more stable and sustainable fiscal policies. Potential regulatory developments in Europe, encouraging long-term stability, may further influence capital distribution.

Citigroup’s stance, alongside expectations of underperformance relative to global markets, suggests a reevaluation of risks associated with investing in U.S. equity. The approach reflects a strategy of caution and diversification considering historical market behavior.