Further Room to Run: Wells Fargo Lifts S&P 500 Target Following US-Iran Peace Accord

 

Wells Fargo has raised its year-end 2026 S&P 500 price target to 7,950 from 7,300, citing robust corporate earnings momentum, diminished macroeconomic tail risks following the interim US-Iran peace framework, and a healthy sentiment reset triggered by the recent market pullback.

 

The upgraded target implies nearly 6% upside from current levels. On Tuesday, the S&P 500 slid 42.94 points, or 0.57%, to close at 7,511.35, weighed down by a rotation out of large-cap tech.

 

In its latest research note, the bank upgraded its 2026 S&P 500 earnings-per-share (EPS) forecast to $340 from $315, reflecting accelerating earnings growth and improving corporate fundamentals.

 

Concurrently, Wells Fargo lifted its 2027 S&P 500 EPS projection to $390 from $365.

 

The bank noted that the easing of geopolitical frictions between Washington and Tehran has effectively peeled back the macro uncertainty that had anchored equity multipliers for months.

 

While Wells Fargo maintains that inflation remains the single greatest headwind for equity markets, it added that if the Federal Reserve chooses to let the domestic economy run hot, equities still offer the most viable structural hedge.

 

Year-to-date, the S&P 500 has advanced nearly 10%, a secular run primarily driven by the expanding generative AI footprint and de-escalation milestones in the Middle East.

 

Wells Fargo pointed out that the recent localized sell-off successfully cooled down crowded institutional positioning, mean-reverting broader market sentiment back to "neutral" thresholds and exposing a clear runway for the next leg higher.

 

"Market sentiment has neatly reset, providing renewed tactical upside for the AI trade.

 

Furthermore, the capital-raising race among hyperscalers presents a highly supportive backlog for the semiconductor and core infrastructure verticals," the bank added.

 

Over the near-term horizon, Wells Fargo remains constructive on risk assets, maintaining an overweight stance on cyclicals and semiconductors as dissipating macro headwinds and durable earnings expansion drive the secular tape.