Wells Fargo downgraded its guidance on the information technology sector to neutral from favorable, pointing to elevated expectations and rising debt-funded investment. The firm said technology's strong gains, elevated expectations and increased debt-funded investment have balanced its risk-reward outlook. At the same time, Wells Fargo upgraded industrials to favorable from neutral, citing the sector's recent pullback and lasting demand from AI infrastructure, power, defense, reshoring and aerospace. In fixed income, it raised leveraged loans to neutral from unfavorable, noting their floating-rate income, lower volatility and limited sensitivity to interest rates. The changes come alongside revised 2027 forecasts: Wells Fargo now expects the Federal Reserve to raise rates more aggressively as geopolitical risk and business technology spending add to inflation pressure, and it raised its 2027 federal funds rate target while expecting higher 10- and 30-year Treasury yields by the end of that year. The bank kept its inflation target at 3.0% but lowered its growth expectations and cut its 2027 unemployment target, and it raised its year-end 2027 crude oil target on supply risks and expected inventory rebuilding while trimming its gold target, though it still expects gold's uptrend to continue.
Wells Fargo & CompanyWells Fargo revised its 2027 forecasts to expect more aggressive Fed rate hikes and higher Treasury yields, alongside its sector rating changes.
NVIDIA CorporationWells Fargo downgraded the information technology sector to neutral, citing elevated expectations and rising debt-funded investment, a negative sector call affecting NVIDIA.
