Wall Street forecasts for next year are becoming increasingly upbeat, and Wells Fargo has now joined that chorus with a projection that the S&P 500 could push deeper into record territory in 2026.
Rather than presenting the move as an extension of the current rally, the bank frames its outlook around policy shifts, corporate spending cycles, and a surprisingly resilient consumer that it believes will keep demand flowing into markets.
Key Takeaways
Wells Fargo expects the S&P 500 to continue rallying in 2026, with a target range of 7,400–7,600.
Large tax refunds, corporate AI expenditure, and potential rate cuts are seen as the main fuel for further gains.
The bank cites a 40-year historical pattern showing the S&P 500 has always been higher a year after rate cuts made near record highs.
The S&P 500 has already posted a sharp rise this year, approaching levels once considered improbable in a high-rate environment. If current gains hold, 2025 will be marked as one of the most persistent winning stretches in modern history, with multiple years of double-digit increases stacking back-to-back. Wells Fargo argues that this durability has helped reset expectations across asset allocators who spent much of the last two years preparing for corrections that never fully materialized.
What Wells Fargo Thinks Will Drive Next Year
Darrell Cronk, who leads the bank’s investment institute, says investors should expect momentum to continue, but not in a straight line. Wells Fargo projects that the S&P 500 could reach between 7,400 and 7,600 in 2026 and that volatility will remain a regular feature of the journey. The firm’s reasoning centers on three reinforcing forces: an improvement in household cash flow, an ongoing wave of corporate capital investment tied to artificial intelligence infrastructure, and the likelihood of easier financial conditions as interest rates come down.
Cronk points to provisions embedded in President Donald Trump’s One Big Beautiful Bill Act, which are expected to deliver some of the largest tax refunds in decades during spring filing season. The bank believes that this influx of disposable income will act as a consumer-driven spark that complements the ongoing boom in factory construction, cloud infrastructure expansion, and research spending. According to Wells Fargo’s internal estimates, business investment attached to this spending cycle now totals more than $230 billion, providing room for revenue and margin growth long after market enthusiasm fades.
A Historical Pattern That Supports the View
The bank also draws on an under-appreciated historical pattern that reinforces its stance. Wells Fargo notes that when the Federal Reserve cuts interest rates while the S&P 500 is trading close to record highs — a scenario that has played out twenty times since the mid-1980s — the index has never finished lower twelve months later. While history does not guarantee the future, Cronk suggests that this recurring behavior reflects underlying strength that investors often underestimate.
An Upbeat View With Caveats
Although the outlook is positive, Wells Fargo does not expect a smooth ascent. The firm anticipates pullbacks, geopolitical flare-ups and uneven earnings cycles along the way, but maintains that the broader direction should still tilt upward when the year is over. In that sense, the bank’s message is less about celebrating current highs and more about arguing that the fundamental drivers of growth are still intact.
As the S&P 500 hovers near 6,840, the bank’s forecast places it among the more constructive voices on the Street. Whether the economy, policy environment and corporate investment cycle evolve as expected will determine how close markets come to fulfilling that projection — but Wells Fargo believes the setup is unusually favorable heading into 2026.
