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Yahoo
7 days ago
- Business
- Yahoo
One of Wall Street's biggest bulls sees tech powering an 11% gain in stocks through the rest of 2025
The S&P 500 is on track to rise another 11% by year-end, Wells Fargo's Chris Harvey says. Harvey predicts the S&P 500 will pass 7,000 by December, making him one of Wall Street's biggest bulls. That's largely because tech stocks will keep winning amid a strong macro backdrop, he said. The US stock market looks like it's going to keep powering through to new records, says one of the biggest bulls on Wall Street. Christopher Harvey, the chief US equity strategist at Wells Fargo, predicts that the S&P 500 will reach 7,007 by the end of the year. His forecast — now one of the most optimistic on Wall Street — implies the benchmark index climbing another 11% from its current levels, or a 19% gain for the year. Speaking to Bloomberg about his thesis on Monday, Harvey pointed to a handful of reasons that would keep the market climbing higher: AI boom. Mega-cap tech stocks will likely keep climbing higher, Harvey said. He brushed off concerns that the hype over artificial intelligence resembled the dot-com bubble in the 1990s, noting that many companies today have stronger fundamentals. Large-cap tech and AI stocks have been on a tear since their low in early April, shortly after President Donald Trump announced his Liberation Day tariffs. The Roundhill Magnificent Seven ETF is up 41% from its April 8 low. "What we're seeing is the winners continue to win. The uber-cap companies have the higher margins, are gaining more market share. There is a real secular trade in AI that will continue," Harvey said. Strong mergers and acquisition activity. Dealmaking has remained relatively strong on Wall Street, another factor that should support the market, Harvey said. Strategic M&A activity was up 11% year-over-year from January through May, according to an analysis from the consultancy Bain & Company. "We think that M&A will continue to be very, very healthy up and down the capitalization," Harvey added. The US consumer remains strong. Americans keep spending, despite concerns that tariff-related price increases could shut off an important engine of the economy. Consumers ramped up their spending more than expected last month, with retail sales rising 0.6%, according to the US Census Bureau. The Fed is likely to cut interest rates. The central bank looks on track to eventually lower interest rates despite hesitation stemming from President Donald Trump's tariffs in recent months. Investors are pricing in two or three rate cuts from the Fed by the end of 2025, according to the CME FedWatch tool. Those bullish factors override any concerns investors have over the market, Harvey said, pointing to concerns about the impact of tariffs and Trump's escalating feud with Fed Chair Jerome Powell. Investors are worried that tariffs could raise inflation while hampering economic growth, and that Trump could interfere with the Fed's independence, which could stoke inflation down the line. "We had seen Trump 1.0. We know his style," Harvey said, referring to the belief that the president goes hard on his policies before softening his tone. Harvey was one of the few strategists on Wall Street who stuck to his original S&P 500 target for the year, even during the historic sell-off in April as Trump unveiled his slate of tariffs. Forecasters like Goldman Sachs and JPMorgan lowered their stock forecasts and lifted their recession odds, before reversing once Trump paused most tariffs. Read the original article on Business Insider Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Axios
14-07-2025
- Business
- Axios
Why Big Tech's dominance could be a double-edged sword for the market
Thank Big Tech for helping power the S&P 500 to its eighth record high of the year. That dominance could also be the market's biggest vulnerability. Why it matters: Nearly half of the S&P 500's earnings growth this year is coming from tech. That kind of concentration raises the stakes — and the risk — if the sector falters. What they're saying:"The whole vibe on the current tech stonks conversation reminds me ... a lot of dot com before the crash," wrote Patrick Moorhead, founder of Moor Insights & Strategy, in a post on X. "Instead of [Nvidia] we were piling money into [Cisco]," Moorhead wrote. Catch up quick: The turn-of-the-century dot-com bubble — when hype drove a surge in tech stocks, which burst when earnings didn't justify valuations — is a cautionary tale that investors would be wise to remember. Cisco is one of the poster children for the bubble, and often draws comparisons to Nvidia, which just became the first $4 trillion company. At its peak valuation, Cisco traded at 200 times forward earnings. Nvidia is less than 40 right now, with the profit growth to back it up. 💭 Thought bubble, from Axios Pro Rata author Dan Primack: It's not just public companies, either. Venture capitalists mostly agree that they overspent and overvalued between 2020 and 2022, leading to a glut of stranded unicorns. 2025 is looking like a replay, with stratospheric startup valuations that often eclipse the ZIRP era. Median U.S. VC deal valuations are higher so far in 2025 than during the peak, save for a slight decrease for Series D+ rounds, per PitchBook. What we're watching: Sky-high startup valuations mirror the eye-popping valuations of some Big Tech firms — the Magnificent Seven ETF (MAGS) trades at 73 times earnings. Still, tech stocks could go up another 10% in the second half of the year thanks to the tailwind of AI, according to Wedbush analyst Dan Ives. Yes, but: Elevated prices don't necessarily mean we're in bubble territory. Unlike the early 2000s, today's tech giants have earnings and cash flow to back up their valuations, Sanctuary Wealth's chief investment strategist Mary Ann Bartels tells Axios. The bottom line: The question is whether the tech rally is happening because of investors hyping up stock prices, or because of strong earnings that demand these higher multiples.
