Sept 15 (Reuters) - Wells Fargo lowered its year-end target for the S&P 500 (.SPX), index to 7,700 from 7,950, as limited catalysts for further gains, and rising political and sector-specific risks cloud the market outlook.
The market is entering the "late innings" of the cycle, a phase that typically supports lower valuation multiples, it said in a September 14 note.
The revised target is roughly 1% above the index's last close of 7,619.98 points, but below projections from several Wall Street peers that expect it to top 8,000 by 2026-end.
Wells Fargo raised its 2027 earnings-per-share estimate for S&P 500 companies to $425 from $395, and to $460 from $425 in 2028, while cautioning that 2028 earnings could face downside risk if spending on AI infrastructure slows.
The benchmark index has risen 11.3% this year, weathering bouts of volatility sparked by Middle East tensions and concerns that sticky inflation could keep the Federal Reserve hawkish for longer.
BofA Global Research also raised its year-end target for the index to 7,400 on Monday, but was below the Wall Street consensus. It said markets were entering a seasonally weak period and were overdue for a pullback.
Of the 496 companies in S&P 500 that reported second-quarter earnings, 85.7% exceeded analysts' estimate, according to data compiled by LSEG.
Wells Fargo cut its stance on the U.S. technology sector to "equal weight" from "overweight", and moved up on healthcare to "overweight" from "equal weight".
It downgraded its view on the technology sector closely after a selloff on Monday, as leading AI firms called for a slowdown in development due to mounting safety concerns.
"We see the midterms as a potential risk to tech, especially as political pushback against data centers continues to gain momentum," it said.
Reporting by Kanchana Chakravarty in Bengaluru; Editing by Shilpi Majumdar
