Wells Fargo forecasts the S&P 500 index to achieve a double-digit return of 12% by the end of 2026, driven by accelerating profit growth from artificial intelligence adoption and a rebound in consumer spending fueled by anticipated tax refunds. The outlook underscores confidence in the technology and consumer discretionary sectors.
- Wells Fargo forecasts a 12% gain for the S&P 500 by December 2026
- AI-driven efficiency is expected to boost S&P 500 EPS by 8%
- Average U.S. household tax refund projected at $2,400 in Q1 2026
- Consumer spending growth forecasted at 5.3% in first half of 2026
- Technology and consumer discretionary sectors are primary beneficiaries
- Financials likely to see improved lending activity and credit quality
Wells Fargo has issued a bullish forecast for the S&P 500, projecting a 12% year-over-year gain by December 2026. The projection hinges on two principal drivers: a measurable uptick in corporate earnings from AI integration across major industries and a boost in household spending due to larger-than-expected tax refunds in early 2026. The firm estimates that AI-related productivity gains will enhance earnings growth for large-cap technology and industrial firms, with an anticipated 8% uplift in S&P 500 earnings per share (EPS) attributable to automation and data-driven efficiency improvements. The second catalyst stems from fiscal policy shifts, including expanded refundable tax credits under recent legislation. Wells Fargo models suggest that the average U.S. household could receive $2,400 in tax refunds in Q1 2026, up from $1,900 in 2024. This influx is expected to stimulate consumer spending, particularly in the discretionary sector, where retail and automotive companies are likely to benefit. The firm anticipates a 5.3% increase in personal consumption expenditures during the first half of 2026, with spending on durable goods and travel rising significantly. Equity markets are already reflecting the optimism, with technology stocks in the S&P 500 outperforming sector benchmarks by 7.2% year-to-date. Financials, particularly large banks with exposure to consumer lending, are also poised to gain as higher spending correlates with improved credit demand and lower delinquency rates. The forecast carries weight given the firm’s long-standing equity research track record and its detailed macroeconomic modeling framework.