Fuguo Securities raises the S&P 500 target to 7,950 points: US-Iran ceasefire and rate cut expectations drive US stock sentiment recovery

BlockBeats News, June 17 — Wanguo Securities' latest research report shows that the institution has raised its year-end target for the S&P 500 index from 7,300 points to 7,950 points, believing that the easing of US-Iran conflict, declining inflation pressures, and fully priced-in rate hike expectations are forming a "triple positive resonance" for US stocks.

The report points out that as the US-Iran temporary peace agreement is expected to be signed and the outlook for shipping through the Strait of Hormuz improves, the global energy risk premium has significantly decreased. The fall in oil prices helps ease US inflation pressures and improves market expectations for the Federal Reserve's policy path.

Wang Chengquan, a stock strategist at Wanguo Securities, stated that current market sentiment has shifted from extreme caution to neutrality. AI and semiconductor sectors remain the core growth drivers, and cyclicals are expected to catch up after geopolitical risks subside. Capital may continue to rotate from defensive assets to risk assets.

Meanwhile, the institution believes that the market has partially priced in the policy stance of Fed Chair Kevin Woor. In the short term, inflation remains the main variable, but the risk of rate hikes is relatively limited.

However, the report also highlights two major downside risks: first, the historic volatility pressure brought by the US midterm election cycle; second, the potential tightening of regulations facing the AI industry, with related policy statements possibly disrupting the current main driver of US stock gains.

Overall, Wanguo Securities believes that US stocks are still in the stage of emotional recovery and structural rally continuation, but the risk of rising volatility is accumulating.