In fact, the bank now projects that U.S. stocks will outperform those in other markets around the world through next year. It issued an investment advisory note on Wednesday raising its recommendation on U.S equities to overweight, up from neutral, The Wall Street Journal noted.
With a recovering housing market and more action from the Federal Reserve to stimulate the economy, U.S. stocks are likely to improve regardless of a potential dip in corporate earnings, Citi now says.
Its analysts say the Standard & Poor’s 500 Index could hit 1,615 by the end of next year, up 12% from the end of the third quarter. The MSCI All-Country World Index is also expected to increase 9% to 360 by the end of 2013.
High on Citigroup’s list of stocks predicted to perform well in the next year are Aetna (NYSE:AET), CSX (NYSE:CSX), Goldman Sachs (NYSE:GS), Google (NASDAQ:GOOG), Qualcomm (NASDAQ:QCOM), Starbucks (NASDAQ:SBUX) and AES (NYSE:AES).
Citigroup’s optimism didn’t extend to Japan, whose equities were downgraded from overweight to underweight due to declining macroeconomic conditions.
Shares of Citigroup rose almost 2% in midday trading on Thursday.