(Bloomberg) -- The stock market’s strength in the first half of 2024 is on track to carry on into the remaining months of the year — and expand into quieter corners of the market, according to Citigroup Inc.’s wealth management business.

That’s why the group predicts the S&P 500 Equal Weight Index — which gives an even share to each constituent — may soon outperform the market-value weighted benchmark S&P 500 Index. While US technology behemoths have almost single-handedly powered the market of late, continued economic strength and profit growth in companies other than Big Tech are expected to broaden equity returns through the rest of this year.

“Nothing against tech, but we think the catalyst is earnings declines switching to gains,” for S&P 500 companies outside of the so-called Magnificent Seven stocks, Steven Wieting, chief investment strategist and chief economist for the Citi wealth division, said.

The S&P 500 has charged 12% higher this year through Wednesday’s close, though so far, the lion’s share of the gains have come from megacap technology companies. Just four stocks — Nvidia Corp., Microsoft Corp., Meta Platforms Inc. and Amazon.com Inc. — account for 56% of the S&P 500’s total return this year. Meanwhile, the gauge’s equal-weighted peer has only risen less than 5%. 

Tech’s reign of the market is largely projected to end as earnings growth stalls among a handful of names, while the rest of S&P members will see it expand. In the first-quarter, S&P 500 firms’ earnings on whole grew 7.7% from the year-ago period — roughly twice the pre-season estimate of 3.8%. But excluding the Magnificent Seven, they fell 0.2%, Bloomberg Intelligence data show. Wall Street expects earnings to accelerate outside of Big Tech in the final months of 2024.

Citi Wealth also sees a profit recovery globally, which could lift stock markets outside of the US.

The firm expects full-year growth for US gross domestic product at 2.4% in 2024 and inflation to fall to about 2.5% by December, while maintaining its view that the Federal Reserve will reduce interest rates before the year closes out. Their optimism around markets is contingent on the current economic backdrop staying intact, rather than on when a rate cut will happen.

“There does seem to be an obsession about getting a rate cut sometime in 2024 — it is almost like there’s this magical end date,” Kristen Bitterly, the Citi wealth unit’s head of investment solutions, said. “We’re focused more on the trajectory of rates from here as opposed to the exact timing of that.”

US elections, meanwhile, could introduce some volatility but won’t change the global economy and market direction, in Citi’s view.

Wieting and Bitterly still see opportunities in artificial intelligence infrastructure and select AI users like robotics and automation, drug discovery, cybersecurity, grid constructors and power generators near data centers, outside of the big-cap tech stocks. They also like health-care equipment and supplies.

While we’re unlikely to see the same run-up that the S&P 500 notched from October lows, “this should be a relatively solid equity market,” Wieting said.  “Around the world, we have an economic expansion that we don’t think will end and we feel reasonable about mid-cycle recovery prospects for markets.”

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