AI BOOM WEAKENS INTEREST RATE IMPACT ON STOCKS , CITI SAYS

What happened: Citigroup analysts say AI-driven earnings growth and changing investor behavior are weakening the traditional impact of interest rates on stock valuations. Key numbers: Citi's fair value model puts the S&P 500 at 17.1 to 22.1 times earnings; the index trades near 22.4 times, above the model's upper range. Why it matters: Citi says the premium points to heightened investor optimism and potentially complacent positioning, while cyclical and defensive stocks have declined since late August as tech and growth stocks held up.

Citigroup analysts say AI-driven earnings growth and changing investor behavior are weakening the traditional impact of interest rates on stock valuations.

Citi says the premium points to heightened investor optimism and potentially complacent positioning, while cyclical and defensive stocks have declined since late August as tech and growth stocks held up.