June 21 (Bloomberg) -- U.S. economic reports are poised to
stop disappointing investors so often and start sending stocks
higher, according to Tobias Levkovich, Citigroup Inc.’s chief
U.S. equity strategist.
    The CHART OF THE DAY displays the Citigroup Economic
Surprise Index, which Levkovich used to reach his conclusion in
a June 17 report. The index is based on the relationship between
the past three months of economic data and the average estimates
of economists surveyed by Bloomberg.
    This month, Citigroup’s index dropped to minus 117.2, its
lowest level since January 2009. The reading followed a three-
month, 215-point plunge. The gauge fell more than two standard
deviations below its historical average, which showed just how
far away it was from the norm, the report said.
    “When the surprise index is that low, the stock market
does have a tendency to generate strong returns” during the
next six to 12 months, Levkovich wrote.
    Since 1998, the Standard & Poor’s 500 Index averaged a six-
month gain of 4.4 percent when the economic gauge was below the
two-standard-deviation threshold, according to the report. For
12 months, the average increase was 15 percent. Stocks rose in
79 percent and 87 percent of the periods studied, respectively.
    Technology and raw-material stocks rose most consistently
along with automakers, retailers and other companies dependent
on consumers’ discretionary income. They were the only three of
the S&P 500’s 10 main industry groups to post six- and 12-month
gains at least 80 percent of the time.