- Wall Street analysts are raising their forecasts for the S&P 500 ahead of the Q3 earnings season.
- Wells Fargo has boosted its S&P 500 target, citing stronger U.S. economic growth and positive consumer spending data.
- Wells Fargo expects two more interest rate cuts by the end of the year and predicts real GDP growth of 2.0% in 2025 and 2.3% in 2026.
- Strategists say U.S. equities could move higher, driven by strong earnings and growth in more companies beyond the tech sector.
- The S&P 500’s current price suggests investors expect corporate earnings to climb 13% next year and 10% in 2027, according to DataTrek Research.
Major Wall Street analysts are increasing their price targets for the S&P 500 index ahead of the upcoming third-quarter earnings season. Many of the largest companies in the index will release their recent earnings this month, leading firms to update their outlooks.
Wells Fargo is the latest company to raise its projections, pointing to signs of stronger U.S. economic growth. The firm mentioned higher consumer spending as a key factor, along with an expectation of two more interest rate cuts before the year ends. Wells Fargo forecasts real gross domestic product (GDP) growth at 2.0% for 2025 and 2.3% for 2026.
In a statement, Wells Fargo said it has “become modestly more constructive on the outlook for economic growth.” The firm expects that earnings and stock performance will expand to more companies, spreading beyond the handful of top tech stocks that have driven recent market gains. The S&P 500 index has recently set new record highs largely due to the performance of these few stocks.
Despite continued concerns about a possible government shutdown and warnings of a potential “bubble” in Artificial Intelligence (AI), strategists see room for further growth in U.S. stocks heading toward the end of the year. Recent performance includes a boost for both the S&P 500 and the Nasdaq, following a surge in AMD shares after the company announced a deal with Sam Altman’s OpenAI. So far this year, the S&P 500 has risen 14%.
Data from DataTrek Research shows the S&P 500 is trading at about 25 times its expected earnings for 2024. The firm notes this suggests investors are confident that profits will reach expectations, which would require corporate earnings to rise 13% next year and another 10% in 2027.
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