Wells Fargo (WFC) is the latest Wall Street firm to outline another bullish outlook for the S&P 500 (^GSPC) in 2026.
Darrell Cronk, president and chief investment officer at the Wells Fargo Investment Institute, said Tuesday that the firm sees the benchmark index reaching 7,400-7,600 in the year ahead, implying as much as an 11% gain, with this rise bolstered by a combination of consumer spending, AI investment, and deregulation.
“If you spin the clock forward to this time next year, in 2026 we actually think returns are going to be solid when we close the books, but we think the path won’t be smooth,” Cronk said on Tuesday.
The index closed Tuesday’s trading session at 6,840.
Wells Fargo’s outlook adds to what’s been a positive string of outlooks for the S&P 500 heading into 2026, with forecasts ranging from 7,100 to 8,000, according to data from TKer’s Sam Ro.
The S&P 500 is currently up 16% this year, on track for its third straight double-digit percentage gain after logging gains north of 20% in both 2023 and 2024.
Should these gains hold, it would mark the sixth time in the last seven years the S&P 500 gained at least 15% in a year, with four of those annual rises coming in above 20%.
Read more: How AI, unemployment, and interest rates could shape the stock market and your investments next year
Wells Fargo’s team expects three main forces to buoy stock prices in the year ahead: lower interest rates, benefits from the AI investment cycle, and a consumer benefiting from the larger tax refunds resulting from President Trump’s One Big Beautiful Bill Act (OBBBA).
Cronk noted provisions in the OBBBA will see consumers receive one of the largest tax refunds they’ve had in decades in the spring. This should put more spending power in the pockets of consumers.
“You couple [that spending] with the full capex spending and factory build and depreciation that was built in for corporate spending, which is almost $230 billion by our math, that’s a significant tailwind for margins and earnings into next year for corporate America as well,” Cronk said.
The Federal Reserve cutting interest rates with the S&P 500 near record highs also has a strong historical record. Wells Fargo noted that of the 20 times the central bank has lowered rates with the index 2% or less from a record high since 1984, the S&P 500 has been higher 100% of the time 12 months later.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
