Wells Fargo raises year-end S&P 500 target on stronger earnings outlook

By Rashika Singh

June 16 (Reuters) - Wells ‌Fargo raised ​its year-end ​2026 target for the S&P 500 to 7,950, pointing to stronger corporate earnings, easing macroeconomic risks following the U.S.-Iran interim deal ‌and a recent market pullback that has reset investor sentiment.

The new ⁠target implies about 5.2% upside from Monday's close of 7,554.29. Its previous target was 7,300.

The ‌brokerage said in a note ‌dated June 15 that it now expects S&P 500 earnings per share for 2026 to rise to $340 from $315, reflecting robust profit momentum and continued strength ​in corporate fundamentals.

Wells Fargo also lifted its 2027 EPS target for S&P 500 to $390 from $365.

It added that geopolitical tensions have eased after the Iran ⁠agreement, helping reduce macro uncertainty that had weighed on markets.

"We continue to see inflation as the biggest risk ​to stocks, but only if the Fed were to react. A potential "run it hot, inflate out" policy is bullish, and ​we expect stocks will be the best ‌inflation hedge in that backdrop" the brokerage said.

The S&P 500 is up 10.3% so far this year, broadly driven by the ⁠AI-driven rally and developments around the Iran conflict.

The recent sell-off in equities has also cooled investor positioning, bringing sentiment back to 'neutral' levels and creating room for further gains, ⁠Wells Fargo said.

"Sentiment has reset, providing room for upside in the AI trade. Hyperscalers' race ​to raise capital is also a big tailwind for semis and infra," brokerage added.

The brokerage maintained a constructive view on risk assets in the near term, particularly in cyclical sectors ‌and semiconductors, as fading macro headwinds and steady earnings growth continue to drive the rally.Meanwhile, Wells Fargo Investment Institute ‌raised its year-end S&P 500 target range to 7,800–8,000, up from its previous forecast ⁠of 7,400–7,600, in a note on ‌June 15th.The institute also ​set a year-end 2027 target range of 8,600–8,800.

(Reporting by Rashika Singh and Joel Jose in Bengaluru; Editing by Tasim Zahid and ‌Shailesh Kuber)

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Ciena beats estimates on strong AI-driven demand, shares rise
• S&P Global Ratings warns of risks from China's generous credit ratings 
• Campbell's taps price hikes, cost cuts as results 'remain unacceptable'