Wells Fargo lowered its year-end 2026 S&P 500 target to 7,700 from 7,950, making it one of the first major institutions to trim its forecast. Strategist Ohsung Kwon cited two main concerns: equity allocations have reached 72%, the highest level since 1969, and 10-year Treasury yields are approaching 19-year highs. The firm estimates a 5% to 10% pullback is likely, which would place the index between 7,239 and 6,858. At the sector level, Wells Fargo downgraded technology to equal weight while maintaining a preference for software over semiconductors, and upgraded healthcare to overweight. Despite these adjustments, EPS estimates were raised to $425 for 2027 and $460 for 2028, indicating the target cut reflects valuation concerns rather than deteriorating fundamentals.
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