Wells Fargo trims S&P 500 index's year-end target to 7,700

Sept 15 (Reuters) - Wells Fargo ‌lowered its year-end ​target ​for the S&P 500 index to 7,700 from 7,950, as limited catalysts for further gains, and rising political and sector-specific ‌risks cloud the market outlook.

The market is entering the "late innings" ⁠of the cycle, a phase that typically supports lower valuation multiples, it said in ‌a September 14 note.

• ‌The revised target is roughly 1% above the index's last close of 7,619.98 points, but below projections from several Wall Street peers that ​expect it to top 8,000 by 2026-end.

• Wells Fargo raised its 2027 earnings-per-share estimate for S&P 500 companies to $425 from $395, and to $460 ⁠from $425 in 2028, while cautioning that 2028 earnings could face downside risk if spending on AI ​infrastructure slows.

• The benchmark index has risen 11.3% this year, weathering bouts of volatility sparked by Middle East tensions ​and concerns that sticky inflation could ‌keep the Federal Reserve hawkish for longer.

• BofA Global Research also raised its year-end target for the index to ⁠7,400 on Monday, but was below the Wall Street consensus. It said markets were entering a seasonally weak period and were overdue for a pullback.

• Of ⁠the 496 companies in S&P 500 that reported second-quarter earnings, 85.7% exceeded analysts' estimate, ​according to data compiled by LSEG.

• Wells Fargo cut its stance on the U.S. technology sector to "equal weight" from "overweight", and moved up on healthcare to "overweight" from "equal weight".

• ‌It downgraded its view on the technology sector closely after a selloff on Monday, as leading AI firms ‌called for a slowdown in development due to mounting safety concerns.

• "We see ⁠the midterms as a potential ‌risk to tech, especially ​as political pushback against data centers continues to gain momentum," it said.

(Reporting by Kanchana Chakravarty in Bengaluru; Editing by ‌Shilpi Majumdar)

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