(Bloomberg) — The US stock rally is set to broaden out beyond technology, according to Citigroup Inc. strategists whose outlook on the sector has turned more cautious.
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A team led by Scott Chronert reduced their stance on the tech sector to market-weight from overweight on the back of a new underweight recommendation on hardware companies. They also raised consumer discretionary to overweight.
“The growth-cyclical barbell we have advocated for several months now allows for a broadening into defensive parts of the market, particularly those that are more interest rate sensitive,” Citi strategists wrote.
Within tech, the strategists maintained an overweight on the software sub-sector and are market-weight on semiconductors. Among other sectors, they cut financials to market-weight for the second quarter.
The S&P 500 is already trading 3% above Citigroup’s end-year target of 5,100 “reflecting soft landing…
