What Happened?
Shares of global financial services giant Citigroup (NYSE: C) jumped 3.1% in the afternoon session after the broader market rallied on renewed hopes for Federal Reserve interest rate cuts, fueled by favorable inflation data and an extension of the U.S.-China trade truce. The surge was part of a significant market-wide upswing, with major indices reaching for all-time highs as investors grew more confident in a potential "soft landing" for the economy, where inflation is controlled without a major recession. The positive sentiment was bolstered by an extension of the U.S.-China tariff truce.
The shares closed the day at $95.68, up 3.6% from previous close.
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What Is The Market Telling Us
Citigroup’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 3% on the news that a surprisingly weak July jobs report and the announcement of sweeping new tariffs fueled fears of an economic slowdown and an impending interest rate cut. The U.S. economy added just 73,000 jobs in July, the weakest gain in over two years, while the unemployment rate rose to 4.2%. This dismal data significantly increased market expectations for a Federal Reserve interest rate cut, with traders now pricing in an 80% probability of a cut in September. Lower interest rates typically harm bank profitability by compressing their net interest margins—the difference between what they earn on loans and pay on deposits. Compounding these worries, the announcement of new tariffs on imports from 92 countries has sparked fears of a global trade war, which could further dampen economic growth and disrupt supply chains, creating a challenging environment for the banking industry.
Citigroup is up 36.7% since the beginning of the year, and at $95.60 per share, it is trading close to its 52-week high of $96.07 from July 2025. Investors who bought $1,000 worth of Citigroup’s shares 5 years ago would now be looking at an investment worth $1,792.
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