Citi expects U.S. stocks to dip before the Nov. 3 midterms but recommends holding steady and adding exposure if shares fall. It cites typical pre-midterm pullbacks and the Fed's Sept. 16 rate hike, while saying AI momentum keeps U.S. equities attractive.
In its Sept. 25 note, Citi said equities had held up despite higher oil prices, rising rates and weak September seasonality. It also cited the Fed's Sept. 16 rate hike—the first in three years—as a source of investor “indigestion.”
A Cantor Fitzgerald analysis cited by Reuters found that the S&P 500 fell 5% or more in the two months before November in 15 of 24 midterm years since 1930. Citi said short-term stress remained plausible amid the Iran war, but forecast the Strait of Hormuz would likely reopen by year-end and oil prices drift to $70 a barrel in Q4.
