Wells Fargo has lowered its year-end S&P 500 target to 7,700 points from 7,950, implying just 1% upside from Monday’s close of 7,619.98. The bank sees a 5-10% downside risk before reaching this target, which could bring the index between 6,858 and 7,239 points. Investor equity allocation stands at 72%, the highest level since 1969, while the 10-year Treasury yield is at its highest in 19 years. Wells Fargo downgraded tech to equal weight and upgraded healthcare to overweight, anticipating that November midterm elections could pressure tech but benefit healthcare in case of a Democratic sweep. Bank of America also noted that the S&P 500 has experienced only one 5% decline this year and is overdue for a pullback.
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