U.S. equities may be poised for a significant rally in the second half of 2025, according to Chris Harvey, head of equity strategy at Wells Fargo Securities.
Despite persistent trade tensions and policy uncertainty, Harvey believes that much of the tariff risk is already priced into the market – perhaps even overstated – and that economic fundamentals remain resilient.
Wells Fargo still sees S&P 500 surpassing 7,000 level by year end
Speaking with CNBC, Harvey reiterated his bold year-end S&P 500 target of 7,070, the highest on Wall Street. This implies an upside of nearly 20% from current levels.
The Wells Fargo analyst sees recent market volatility as part of a broader constructive trend.
“We’re making progress on trade and tariff. We’ll continue to make progress,” he noted in the said interview, adding “we’ll take a step back every once in a while, but Trump administration appears intent on pushing the ball forward.”
One of the key factors supporting Harvey’s optimism is the Federal Reserve’s stance on interest rates.
He pointed to recent comments by Fed Governor Christopher Waller, who suggested that if tariffs remain in the 10% range, the Fed could justify cutting interest rates to offset the drag on growth.
According to the Wells Fargo equity strategist, “that’s where we think tariffs end up, around 10-12%. We’re getting more comfortable with that belief.”
Tariff revenue could help the US narrow its fiscal deficit
Harvey sees modest tariffs in the aforementioned range distributing costs relatively evenly among importers, corporations, and consumers, with limited economic disruption.
Meanwhile, the revenue generated could help narrow the fiscal deficit. “That’s a real positive, a real constructive thing,” he said, underscoring the potential for increased government revenue to become a stabilizing force.
Beyond China, the Wells Fargo strategist believes trade deals with other key economies like India, Japan, and the European Union may carry even more strategic importance.
We’re in the process of disintermediating China. We’re telling our allies: if you want to benefit from this shift, play ball with us.
He pointed to earnings calls where companies are increasingly citing efforts to reduce exposure to China by relocating supply chains and diversifying manufacturing bases.
This, according to Chris Harvey, indicates that the US strategy is gaining traction and could support broader economic resilience.
What could offset Wells Fargo’s bullish view on US stocks?
On the flip side, Harvey warned that uncertainty remains the biggest risk to his forecast. If there is not enough clarity on trade by mid-summer, it could begin to weigh on corporate confidence and hiring.
If we’re here in June or July and still saying, ‘We’re not sure,’ then people may start resizing their workforce. That’s when things could start to fall apart.
Even so, the strategist remains bullish that by July, the market could shift its focus to pro-growth themes such as potential tax cuts and fiscal stimulus.
If significant trade progress is achieved, with deals involving India or Japan, for example, investors may begin to look past temporary economic softness and toward a more optimistic 2026.
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