LIVE MARKETS-Navigating the market maze: S&P 500, Trump policies and Mag 7

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NAVIGATING THE MARKET MAZE: S&P 500, TRUMP POLICIES AND MAG 7

The U.S. financial landscape is as dynamic as ever, as investors navigate through the first quarter of 2025, thanks to Trump’s tariff policy, economic data surprises and a mixed bag of earnings from megacap technology companies.

The S&P 500 index .SPX has shown remarkable resilience, but potential risks from Trump’s tariff policy remain, Citigroup analysts said. The index is up roughly 4% for the year so far.

“We see slightly more near-intermediate term downside risk to Trump policy effects than upside opportunity,” said Citigroup analyst Scott Chronert.

Yet, S&P 500 price movements signals that investors continue to view a “pro-business” bias to Trump’s policies, the brokerage added.
The S&P 500 performance is characterized by a broadening effect, with large-cap stocks stepping into the spotlight as the megacap leaders no longer dominate the scene, Citi said.
Among the “Magnificent 7,” only Meta META.O has notably outperformed, leaving investors to ponder the shifting dynamics of market leadership.

The Mag 7 companies significantly outperformed the S&P 500 in 2024, with breakthroughs in artificial intelligence sparking a surge in tech stocks and the economy kept defying the doomsayers, but their performance has moderated in 2025 with a narrower margin of outperformance.

“Investors have been rightly enamored with the Mag 7 as a driver of index returns over the past two years, but expectations are unfolding such that more impetus is being put on the rest of the S&P 500 to drive index gains,” Citi says.

“Mag 7 at best is now more idiosyncratic, with the beat and raise dynamic of the past two years no longer a given,” the brokerage added.
Citi strategists expect ongoing bouts of volatility, yet they noted that the more relevant question for investors at this point may be “what is the bigger risk to markets, Trump policies or the Mag 7.”

(Joel Jose)

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