US corporate profits are crumbling from the bottom up

Citigroup’s analysis reveals contrasting profit margin trends for US companies, with large firms seeing an increase while small- and mid-cap companies face significant declines in expected earnings growth, dropping from 5% to just 1% for 2025. Despite a generally positive first-quarter earnings season for the S&P 500, driven by major tech firms, broader market trends deteriorate, particularly in consumer discretionary sectors amid tariff uncertainties and recession fears. Analysts caution that these developments may signal deeper issues ahead, emphasizing the need for investor vigilance.