Wells Fargo has raised its year-end 2026 target for the S&P 500 to 7,950, citing stronger corporate earnings expectations, reduced macroeconomic uncertainty following the interim U.S.-Iran agreement, and improved market sentiment after a recent pullback, Reuters reported.
The revised target implies an upside of about 5.2% from Monday's closing level of 7,554.29. The brokerage had previously projected the benchmark index to end 2026 at 7,300.
According to a June 15 note, Wells Fargo increased its forecast for S&P 500 earnings per share (EPS) in 2026 to $340 from $315. The brokerage attributed the upgrade to continued strength in corporate fundamentals and resilient profit growth across sectors.
The firm also lifted its 2027 EPS estimate to $390 from $365, reflecting confidence in the longer-term earnings trajectory of U.S. companies.
Reuters reported that Wells Fargo believes geopolitical risks have moderated following the Iran agreement, helping to reduce the uncertainty that had weighed on investor sentiment in recent months. The brokerage noted that inflation remains a key risk for equities, particularly if it prompts a more aggressive response from the U.S. Federal Reserve. However, it suggested that equities could continue to perform well in an environment where inflation remains elevated but manageable.
The S&P 500 has gained 10.3% so far this year, supported by enthusiasm surrounding artificial intelligence-related investments and developments linked to the Iran conflict.
Wells Fargo also highlighted that the recent decline in equities helped cool investor positioning, bringing market sentiment back to more neutral levels and potentially creating room for further gains. Reuters reported that the brokerage sees continued momentum in the AI-driven investment cycle, with significant capital spending by major technology companies expected to support semiconductor and infrastructure-related businesses.
The brokerage maintained a positive near-term outlook for risk assets, particularly cyclical sectors and semiconductor stocks, as easing macroeconomic headwinds and steady earnings growth continue to underpin the broader market rally.
Wells Fargo Investment Institute raised its year-end 2026 target range for the S&P 500 to 7,800–8,000, up from its previous forecast of 7,400–7,600. The institute also introduced a year-end 2027 target range of 8,600–8,800, reflecting its constructive long-term outlook for U.S. equities.
