The firm says investors are getting mixed messages from key economic data.
There are $52 billion of long positions on the S&P 500 and 88% of them are in a loss.
The S&P 500 is already trading 3% above Citigroup's end-year target of 5,100.
Strategist Michael Wilson expects the S&P 500 to drop to 4,500 points.
“Stocks are now trying to move past their dependence on central bank policy,” the strategist said.
Companies have adjusted to higher interest rates and a tepid demand environment, the strategists said.
The firm's analysts see the S&P 500 rising to 5,200 by the end of the year.
The Magnificent Seven of megacap tech stocks doubled in value in 2023.
U.S. stocks have been soaring as the economy held up better than expected.
The picture may become more clear in the coming weeks as more companies release quarterly results.
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