Economists at the US banking giant Wells Fargo are reportedly cutting their S&P 500 outlook this year due to the impacts of the ongoing Iran conflict.
Wells Fargo is now forecasting the S&P 500 will close out the year at 7,300, down from its previous prediction of 7,800, which would represent a less than 7% gain for the index in 2026, reports Bloomberg.
The updated outlook would be an 11% rally from the current S&P 500 level, after the index’s massive correction during the US war with Iran, which began five weeks ago. The S&P 500 is hovering around 6,575 points at time of writing.
Ohsung Kwon, Wells Fargo’s chief equity strategist, says in a note to investors that he remains bullish on stocks while flagging inflation as a key risk heading into the second half of the year as the war is delivering economic and market blows.
“We’re incorporating the emerging risk that wasn’t our base case heading into the year…
The headwind is building exponentially each day.”
Kwon also says investors appear to be hedging investments and not selling out of their positions as has occurred in other periods of market uncertainty.
Meanwhile, stocks started to reverse losses this week after President Donald Trump suggested he wants an end to the war with Iran, even if the Strait of Hormuz remains virtually closed.
Many other strategists are not revising their market forecasts that were made prior to the war. However, JPMorgan Chase has also slightly reduced ts forecast.
Meanwhile, Morgan Stanley’s Chief US Equity Strategist and Chief Investment Officer Mike Wilson predicts that US stocks are near a bottom, and banking giant Barclays actually raised their S&P 500 year-end forecast based on an expected strong profit growth for companies, despite the war’s impacts.
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