MW Here's how Trump's tax cuts and the World Cup could push stocks higher over the next three months

By Joseph Adinolfi

Inflation could start to hurt stocks in the second half of 2026, but investors should expect the S&P 500 to return to record highs before then, Wells Fargo says

Expect the S&P 500 to be back in record territory by the summer, one Wells Fargo equity analyst says

An economic "sugar high" created by a combination of factors could help push the S&P 500 as high as 7,300 by July, according to a team of equity strategists at Wells Fargo.

But the good times may not last forever: Stocks could hit another rough patch in the second half of 2026 as inflation reaccelerates more meaningfully.

Four factors could help drive strong economic growth in the months ahead, according to Ohsung Kwon, Wells Fargo's chief equity strategist. Tax benefits driven by President Donald Trump's One Big Beautiful Bill Act should more than offset the higher cost of living stemming from rising oil prices. Lower tariff rates following this year's Supreme Court decision, coupled with the supply-chain shock driven by the Iran conflict, could boost the ISM manufacturing PMI, and key industrial names along with it, as firms scramble to replenish dwindling inventories.

Kwon and his team added that they believe the AI bull run in stocks could soon hit its stride, as firms finally find a way to monetize the technology. Wells Fargo expects free cash flow for Microsoft $(MSFT)$, Meta Platforms (META), Alphabet $(GOOGL)$ and Amazon.com (AMZN) - a group of megacap stocks collectively referred to as hyperscalers - will soon inflect higher, following a substantial decline in 2026 estimates.

And finally, this summer's World Cup could help boost consumption, while driving some consumer prices higher.

"We expect the market to overshoot until growth starts to slow and inflation surprises in [the second half of 2026]," Kwon and his team said in written commentary.

Kwon said he and his team like Nasdaq-100 upside for investors. Expectations for tech earnings have continued to climb, even as tech-heavy indexes like the Nasdaq-100 have lagged behind more broad-based rivals like the S&P 500 so far in 2026. That has led to a notable divergence between price performance and earnings expectations that should soon close, provided the first-quarter earnings season doesn't reveal any major surprises.

Even before the Iran conflict began, Kwon and his team were warning about the risk that inflation might reaccelerate later this year. The jump in oil prices since has only further cemented the team's expectations that another wave of inflation is looming.

Oil-price shocks typically slow consumption with a lag. Typically, the impact isn't seen until at least three months later. That could translate into a meaningful economic slowdown later in the year.

One-year inflation swaps have continued to underestimate the impact of higher oil prices, Kwon said. He ran a regression analysis on several key variables to show that investors should expect headline CPI to remain consistently above 3% over the next three to six months.

U.S. stocks were trading higher on Tuesday, with the S&P 500 SPX, Nasdaq Composite COMP and Dow Jones Industrial Average DJIA all in the green in recent trading, FactSet data showed.

-Joseph Adinolfi

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April 14, 2026 11:41 ET (15:41 GMT)

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