Several Wall Street institutions have stated that the bullish case for the US stock market remains intact, with Goldman Sachs and Citigroup continuing to be optimistic about the outlook.

June 8 — Fueled by stronger-than-expected non-farm payroll data, expectations that the Federal Reserve will raise interest rates this year have climbed sharply, triggering a 4.2% plunge in the Nasdaq last Friday. The semiconductor sector led the sell-off, sparking volatility across global markets. But Wall Street heavyweights including Morgan Stanley and Citigroup frame this pullback as a healthy adjustment, not a signal that the U.S. bull market is ending. Morgan Stanley’s Chief U.S. Stock Strategist Mike Wilson blames the recent sell-off on outsized gains in semiconductor stocks and overcrowded trading positions in the sector. The Philadelphia Semiconductor Index has rallied nearly 96% year-to-date, a jump that far outpaces historical norms and puts the group firmly in overbought territory. Wilson says the current correction will help cool excess market sentiment, but insists it won’t erode the underlying strength of the U.S. economy or corporate earnings fundamentals. Wilson cites bright economic data to back that stance: the U.S. ISM Manufacturing Index rose to 54, its highest level since 2022, while non-farm payrolls have averaged 166,000 new jobs added monthly over the past three months — both signs of ongoing economic resilience. Morgan Stanley’s team keeps its year-end S&P 500 target at 8,000 points, and advises investors to cut exposure to overcrowded momentum trades, shifting allocations instead to sectors like discretionary consumer stocks, regional banks, and transportation. Meanwhile, Citigroup has raised its year-end 2026 S&P 500 target from 7,700 to 8,100 points, and lifted its 2026 earnings per share (EPS) forecast for S&P 500 components from $320 to $350. The bank also released its first-ever 2027 EPS projection for the index, setting it at $400. Citigroup argues the AI investment boom and resilient corporate earnings will continue to support U.S. stock performance. However, it warns that the pace of AI capital expenditure growth could slow after 2027, potentially creating valuation adjustment pressure for the market. Still, the bank notes this risk hasn’t become a core trading driver for current market conditions.