Wells Fargo strategist Ohsung Kwon lowered the year-end 2026 S&P 500 target to 7,700 from 7,950 on September 14. The bank warns of a potential 5% to 10% market pullback, which could bring the index to a range between 7,239 and 6,858. BofA Global Research also adjusted its target to 7,400 on the same day.
The firm cites structural concerns, noting that equity allocations in portfolios have reached 72%, the highest level since 1969. Wells Fargo suggests a 60% allocation is more appropriate. Additionally, ten-year Treasury yields are nearing 19-year highs, making stock valuations harder to justify.
Despite the target cut, Wells Fargo raised its EPS projections for 2027 to $425 and for 2028 to $460. The bank downgraded the technology sector to equal weight, favoring software over semiconductor firms. Conversely, the healthcare sector was upgraded to overweight due to its defensive nature.
The S&P 500 index rose 11.3% year-to-date through mid-September 2026. The new target of 7,700 implies a gain of approximately 1% from the level of 7,620 observed at the time of the revision.
