Wells Fargo has lowered its year-end 2026 S&P 500 target to 7,700 from 7,950, citing concerns about equity valuations, investor positioning and liquidity conditions, and now forecasts potential near-term downside of 5% to 10%. In a research note, analysts led by Ohsung Kwon raised their earnings-per-share forecasts to $425 for 2027 and $460 for 2028, but said the market is entering the late innings of the cycle, when valuation multiples could contract despite continued earnings growth. The firm downgraded technology to equal-weight from overweight and upgraded health care to overweight from equal-weight, and flagged appreciation in the South Korean won as a potential obstacle for memory semiconductor stocks. Wells Fargo estimated that investors currently allocate 72% of their portfolios to equities, the highest proportion since 1969, and calculated that an equity allocation of approximately 60% would be consistent with its valuation framework given the US 10-year Treasury yield approaching 5%, a 12-percentage-point gap it called the widest negative gap since 1969 and wider than the Tech Bubble. The firm said its Liquidity Indicator has fallen to its lowest level of the year and is expected to decline further through November, identified Wednesday's Federal Reserve meeting as a potential catalyst with the market-implied probability of an interest-rate move at 94%, and also highlighted a September 24 summit between President Trump and Chinese President Xi Jinping as another potential catalyst.
Wells Fargo & CompanyWells Fargo cut its S&P 500 target and downgraded tech to equal-weight, but this is its own research call on the market rather than a company-specific financial event.
