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)
