One of Wall Street's biggest bulls sees tech powering an 11% gain in stocks through the rest of 2025

Business Insider

15 hours ago

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 e ventually 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.