Citi (C) has joined the growing chorus of Wall Street firms turning bullish on the S&P 500 (^GSPC), boosting its price target on the index to 5600 by year's end. Citi's Head of U.S. Equity Strategy Scott Chronert joins the Morning Brief to share his outlook on the market's trajectory.

Chronert attributes the S&P 500's upside run this year to three key factors: first, the outsize contribution of Nvidia (NVDA), which has single-handedly driven around 5 percentage points of the index's move to date; second, the 4% contribution from the rest of the "Magnificent Seven" tech giants; and third, the remaining 5% stemming from the other 493 constituents of the index. He notes that the S&P's gains have been primarily driven by "the mega-cap growth cohort" and continues to be supported by an "ongoing beat and raise dynamic."

However, Chronert voices a potential concern, stating, "I think, in general, what we're gonna see as we go into the Q2 reporting period, is a little bit more evidence that the lagging effects of Fed rate hikes to this point is starting to weigh on fundamental activity." Nonetheless, he adds: "In the meantime, we do think that this AI driver is gonna continue to spur a lot of activity."

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This post was written by Angel Smith