Economists at US banking giant Wells Fargo are reportedly lowering their outlook for the S&P 500 this year due to the fallout from the ongoing conflict with Iran.
Wells Fargo now predicts the S&P 500 will end the year at 7,300, down from its previous forecast of 7,800, which would mean a gain of less than 7% for the index in 2026. reports Bloomberg.
The updated outlook would be for an 11% rally from the current S&P 500 level, following the index’s massive correction during the US war with Iran that started five weeks ago. At the time of writing, the S&P 500 is hovering around 6,575 points.
Ohsung Kwon, Wells Fargo’s chief equity strategist, said in a note to investors that he remains bullish on stocks, while calling inflation a key risk in the second half of the year as the war delivers economic and market blows.
“We are taking into account the emerging risk that was not our base case going into the year…
The headwinds are increasing exponentially every day.”
Kwon also says investors appear to be hedging investments and not wanting to sell their positions, as has happened in other periods of market uncertainty.
Meanwhile, stocks began reversing their losses this week after President Donald Trump suggested he wanted to end the war with Iran even as the Strait of Hormuz remains virtually closed.
Many other strategists do not revise their pre-war market forecasts. However, JPMorgan Chase has also lowered its ts forecast slightly.
Meanwhile, Mike Wilson, Chief US Equity Strategist and Chief Investment Officer of Morgan Stanley, predicts that US stocks are near a record low, and banking giant Barclays has even raised its S&P 500 year-end forecast on expectations of strong corporate earnings growth despite the fallout from the war.
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