Wells Fargo Lifts S&P Target to 7,950, Calls Summer Rally
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- Wells Fargo strategists led by Ohsung Kwon outlined four bullish pillars in a Monday note — July seasonality, tariff refund-fueled earnings, Trump account inflows, and delayed AI IPOs — projecting a summer rally that bookends expected September volatility tied to U.S. midterm politics.
- The first fortnight of July has delivered an average S&P 500 return of 1.35% over the last century, the strongest seasonality of any period, per Wells Fargo's research.
- Wells Fargo raised its year-end S&P 500 target from 7,300 to 7,950 two weeks ago and frames the rumored delays in OpenAI and Anthropic IPOs as outright bullish — less new equity supply combined with AI labs unable to raise token prices could 'extend the compute cycle.'
- New "Trump accounts" — investment accounts established for qualifying children — are projected to generate $20 billion in price-insensitive buying of large-cap U.S. stocks; modest versus annual 401(k) flows but uniquely dedicated to equities rather than diversified across asset classes.
- Q2 earnings season is forecast to deliver 22% year-over-year EPS growth, up from Q1's 19%, with $36 billion in tariff refunds already issued and potentially another $90 billion in the pipeline, per Wells Fargo — a windfall many companies have not yet baked into guidance.
- Wells Fargo's proprietary sentiment indicator has reset to neutral after triggering a sell signal in May, and quant funds battered in late June's momentum-stock rout are now neutrally positioned.
- Consumer staples and industrials are flagged as the sectors most likely to benefit from the tariff refund surge, with the Wells Fargo report detailing how many individual companies have flagged EPS-growth upside from refunds not yet in guidance.
Why it matters: If Wells Fargo's four-pillar thesis holds, the S&P 500 gets a near-term lift from $20 billion in Trump account equity inflows dedicated solely to U.S. stocks, a historically strong July window averaging 1.35%, and an estimated $36 billion to $126 billion tariff refund windfall that companies have not yet incorporated into earnings guidance — with consumer staples and industrials best positioned to capture the EPS upside.
