Wells Fargo warns of a possible stock market pullback

Wells Fargo has warned that U.S. stocks may be due for a decline after a strong run. The bank’s strategist Ohsung Kwon lowered his yearend target for the S&P 500 to 7,700 from 7,950, citing latecycle conditions and the risk of lower valuation multiples. Kwon said the index could fall 5% to 10% before reaching that target, pointing to elevated investor equity exposure and rising bond yields as signs of complacency. He also said the bank’s liquidity indicators have weakened this year. In its sector view, Wells Fargo shifted to a more cautious stance on technology and became more positive on healthcare. The bank said upcoming U.S. midterm elections could affect both sectors, with possible political pressure on data centers weighing on tech and a Democratic win potentially helping healthcare through expanded Affordable Care Act subsidies. The warning comes as other Wall Street firms also say a pullback may be overdue after a year with few sizable declines in the S&P 500.