Wells Fargo sees S&P 500 clocking double-digit gain in 2026 as AI boosts profits, tax refunds lift spending

Wells Fargo (WFC) is the latest Wall Street steadfast to outline different bullish outlook for the S&P 500 (^GSPC) successful 2026.

Darrell Cronk, president and main concern serviceman astatine the Wells Fargo Investment Institute, said Tuesday that the steadfast sees the benchmark scale reaching 7,400-7,600 successful the twelvemonth ahead, implying arsenic overmuch arsenic an 11% gain, with this emergence bolstered by a operation of user spending, AI investment, and deregulation.

"If you rotation the timepiece guardant to this clip adjacent year, successful 2026 we really deliberation returns are going to beryllium coagulated erstwhile we adjacent the books, but we deliberation the way won't beryllium smooth," Cronk said connected Tuesday.

The scale closed Tuesday's trading league astatine 6,840.

Wells Fargo's outlook adds to what's been a affirmative drawstring of outlooks for the S&P 500 heading into 2026, with forecasts ranging from 7,100 to 8,000, according to information from TKer's Sam Ro.

The S&P 500 is presently up 16% this year, connected way for its 3rd consecutive double-digit percent summation aft logging gains northbound of 20% successful some 2023 and 2024.

Should these gains hold, it would people the sixth clip successful the past 7 years the S&P 500 gained astatine slightest 15% successful a year, with 4 of those yearly rises coming successful supra 20%.

Read more: How AI, unemployment, and involvement rates could signifier the banal marketplace and your investments adjacent year

Wells Fargo's squad expects 3 main forces to buoy banal prices successful the twelvemonth ahead: little involvement rates, benefits from the AI concern cycle, and a user benefiting from the larger taxation refunds resulting from President Trump's One Big Beautiful Bill Act (OBBBA).

Cronk noted provisions successful the OBBBA volition spot consumers person 1 of the largest taxation refunds they've had successful decades successful the spring. This should enactment much spending powerfulness successful the pockets of consumers.

"You mates [that spending] with the afloat capex spending and mill physique and depreciation that was built successful for firm spending, which is astir $230 cardinal by our math, that's a important tailwind for margins and net into adjacent twelvemonth for firm America arsenic well," Cronk said.

The Federal Reserve cutting involvement rates with the S&P 500 adjacent grounds highs besides has a beardown humanities record. Wells Fargo noted that of the 20 times the cardinal slope has lowered rates with the scale 2% oregon little from a grounds precocious since 1984, the S&P 500 has been higher 100% of the clip 12 months later.

Brooke DiPalma is simply a newsman for Yahoo Finance. Follow her connected X astatine @BrookeDiPalma oregon email her astatine [email protected].