Wells Fargo Investment Institute: It's Time to Build Resilience and Capitalize on Opportunities

The WFII 2025 Midyear Outlook highlights economic and market forecasts, favored sectors, and top portfolio ideas amid volatility

Wells Fargo Investment Institute (WFII) today released its “Midyear Outlook report: Opportunities amid uneven terrain.” The first half of 2025 delivered some of the most stunning and rapid policy changes of the past 80 years. This midyear report assesses the changes since the release of WFII’s 2025 Outlook in December and highlights the potential risks and opportunities that may lie ahead. The report includes specific ideas to build portfolio diversification and resilience during the remainder of 2025 and 2026.

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Wells Fargo Investment Institute 2025 Midyear Outlook: Opportunities amid uneven terrain (Graphic: Wells Fargo)

“The news of the day is moving with sudden speed, and investors must react quickly to anticipate and manage downstream market implications,” said Darrell Cronk, chief investment officer for Wells Fargo Wealth & Investment Management. “This can feel jarring, but we believe that uncertainty and volatility often create the best opportunities for investors, and that this time will be no different.”

Portfolio returns often take two steps forward and one step back. Markets enjoyed extraordinarily strong returns in 2023 and 2024 with subdued volatility before the changes of first half of 2025 arrived. But households and businesses have a long history of adjusting to tax increases, such as tariffs, and markets are adjusting as well.

Outlook on global economy and asset groups:

• Global economy: Steady underlying support and looming tax policy extensions should cushion a mid-2025, tariff-induced economic slowdown and help the U.S. and international economies avoid a recession into 2026.
• Global equities: The economic soft landing we expect should help drive global equity prices higher through 2026.
• Global fixed income: Lingering policy uncertainties likely will keep U.S. Treasury yields volatile into year-end 2025, but we expect slightly higher yields in 2026.
• Global real assets: The modest improvement in global economic growth that we expect into 2026 should stimulate additional commodity demand and moderately higher commodity prices through 2026.
• Global alternative investments: We see value in alternative strategies’ diversification benefits, as well as their potential ability to capitalize on opportunities during market dislocations.

Top portfolio ideas for the balance of 2025:

1. Position portfolios for policy and geopolitical uncertainties
2. Focus on quality and diversifying assets
3. Cushion portfolios with income-generating assets
4. Selectively add exposure to artificial intelligence (AI)
5. Complement U.S. exposure with international assets

Highlights of WFII’s forecast:

• The anticipated U.S. GDP (gross domestic product) growth target for 2025 year-end is 1.0%, and 1.8% for 2026.
• The target for U.S. consumer price inflation in 2025 is 3.5% and 2026 is 2.6%.
• The S&P 500 Index price target range is 5,900 – 6,100 for year-end 2025 and 6,400 – 6,600 for 2026.
• Federal funds rate target for 2025 is 4.00% – 4.25% and 3.75% – 4.00% in 2026.

Join the WFII 2025 Midyear Outlook call today, June 11, at 4:15 p.m. Eastern Time. Dial-in: 877-601-6604; Passcode: 71-306-44

A summary of the WFII 2025 Midyear Outlook is available (PDF).

Please see the full report for detailed information.

Risk Disclosure

Forecasts and targets are based on certain assumptions and on our current views of market and economic conditions, which are subject to change.

All investing involves risks, including the possible loss of principal. There can be no assurance that any investment strategy will be successful and meet its investment objectives. Investments fluctuate with changes in market and economic conditions and in different environments due to numerous factors, some of which may be unpredictable. Asset allocation and diversification do not guarantee investment returns or eliminate risk of loss.

Stock markets, especially foreign markets, are volatile. A stock’s value may fluctuate in response to general economic and market conditions, the prospects of individual companies, and industry sectors. International investing has additional risks including those associated with currency fluctuation, political and economic instability, and different accounting standards. This may result in greater share price volatility. These risks are heightened in emerging and frontier markets. Investments in fixed-income securities are subject to market, interest rate, credit, liquidity, inflation, prepayment, extension, and other risks. Bond prices fluctuate inversely to changes in interest rates. Therefore, a general rise in interest rates can result in a decline in the bond’s price.

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor or potential investor. This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold, or sell securities. Do not use this report as the primary basis for investment decisions. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs, and investment time horizon.

About Wells Fargo Investment Institute

Wells Fargo Investment Institute, Inc. is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells Fargo & Company.

About Wells Fargo

Wells Fargo & Company (NYSE: WFC) is a leading financial services company that has approximately $1.9 trillion in assets. We provide a diversified set of banking, investment and mortgage products and services, as well as consumer and commercial finance, through our four reportable operating segments: Consumer Banking and Lending, Commercial Banking, Corporate and Investment Banking, and Wealth & Investment Management. Wells Fargo ranked No. 34 on Fortune’s 2024 rankings of America’s largest corporations. News, insights, and perspectives from Wells Fargo are also available at Wells Fargo Stories.

Additional information may be found at www.wellsfargo.com

LinkedIn: https://www.linkedin.com/company/wellsfargo

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