As recession fears swirl on Wall Street, Citi says corporate profits may surprise many later this year.

And the stock market's performance should follow.

"We see room for U.S. equities to work higher into year-end ‘22, triggered by more resilient earnings than commonly expected, and potential valuation relief as Fed hawkishness is more fully priced in," said Citi strategist Scott Chronert in a new note to clients.

Chronert sees the S&P 500 rallying about 8% from current levels to end the year at 4,200.