Due to optimism about AI and expectations of relaxed borrowing costs, Wells Fargo Bank raised its year-end target against the S&P 500 index this week.

Wells Fargo's Optimistic Expectations

Wells Fargo raised its year-end target for the S&P 500 index to 5,535 points on Monday, the highest expectation among Wall Street securities firms. This adjustment reflects the bank's optimistic view on artificial intelligence and expectations that borrowing costs may relax.

So far, the S&P 500 index has risen 9% this year, mainly due to expectations of interest rate cuts and investor enthusiasm for artificial intelligence.

The driving force of AI and large stocks

The heavyweight index stocks of Apple, Amazon, Google's parent companies Alphabet, Meta, Microsoft, Nvidia, and Tesla, known as the "MAG-7" of the US stock market, are benefiting from the AI wave.

The stance of the Federal Reserve and market volatility

The Federal Reserve's insistence on its three rate cuts last month has driven a widespread rise in the US stock market. Despite recent hawkish remarks from policy makers and strong economic data reducing some upward momentum.

Profit expectations for the S&P 500

Wells Fargo Bank also raised its earnings per share expectation for the S&P 500 from $235 to $242.

Market Outlook for 2024

Wells Fargo Bank stated that it expects the stock market to have some room for improvement, but still expects volatility to intensify in the first half of 2024. And it appears that the possibility of a "melt up" in the second half of 2024 is increasing.