The S&P 500 (SPX) is rising on Tuesday after Wells Fargo raised its U.S. growth and rate cut forecast.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
The bank expects real gross domestic product (GDP) growth of 2.0% in 2025 and 2.3% in 2026 and has “become modestly more constructive on the outlook for economic growth.” Wells Fargo revised its estimates following upbeat consumer spending data. Last month, the Commerce Department revised second quarter consumer spending growth to 2.5% from 1.6%.
Wells Fargo Calls for Four Rate Cuts Through H1 2026
Wells Fargo expects two additional rate cuts through the end of the year and believes the Fed will “look through a temporary uptick in inflation.” Furthermore, the bank predicts that the central bank will lower rates two more times during the first half of 2026. Each rate cut is equivalent to 25 basis points.
Four more rate cuts by the end of June 2026 would place the federal funds rate between 3.00% and 3.25%. The odds of this scenario are at 31.6% on CME’s FedWatch tool, although the probability of three rate cuts is slightly higher at 34.7%.
Stay ahead of macro events with our up-to-the-minute Economic Calendar — filter by impact, country, and more.