Citibank, JPMorgan expect profit-taking wave in US market

US investment banks Citibank and JPMorgan believe that current stock market conditions are increasingly supportive of a near-term wave of profit-taking by investors.

In separate reports issued today, July 8, analysts from both banks noted that momentum in US equities remains intact. Citibank highlighted that talk of US exceptionalism has resurfaced, particularly after last week’s strong jobs data, which helped boost investor sentiment.

According to MarketWatch, traders appear convinced that easing trade tensions is the inevitable outcome, prompting continued buying activity in US indices.

Citibank’s weekly positioning tracker showed an almost exclusive tilt toward the buy side. However, with markets awaiting developments on tariffs this week, the likelihood of a profit-taking wave is growing.

The S&P 500 index closed, on July 7, down 0.8% after US President Donald Trump issued tariff notices to several countries, effective Aug. 1. Despite the decline, the index recorded its second-highest closing level ever.

JPMorgan’s global equity derivatives team pointed to a continued buildup in long positions in US equity futures and exchange-traded funds (ETFs).

Meanwhile, data from the Commodity Futures Trading Commission (CFTC) confirmed a clear shift in favor of Nasdaq futures and revealed that US asset managers significantly increased their holdings of US treasuries across all maturities.