Wall Street's Bullishness Could Be Derailed by July PCE Report

Jeffries raised its S&P 500 target to 6600, citing robust Q2 earnings and easing concerns about the US economy. Other banks like UBS, City Group, and HSBC have also boosted their targets. However, economists expect the PCE report to show a 2.9% increase, which could signal persistent inflation and lead the Fed to adopt a more cautious tone, potentially reducing the likelihood of an interest rate cut in September.

In a significant move reflecting optimism in the U.S. market, Jefferies has elevated its year-end target for the S&P 500 to 6,600, citing robust Q2 earnings and easing concerns about the U.S. economy [1]. This upward revision follows a trend of other major brokerages, including UBS, Citigroup, and HSBC, who have similarly boosted their targets [2].

Jefferies' new target represents a significant increase from its previous estimate of 5,600, positioning it as the sole firm projecting the benchmark index above the 6,000 mark. The brokerage attributes this optimism to strong corporate earnings and the resilience of the macroeconomic backdrop, with notable strength in financials and AI-driven companies leading the market gains [1].

UBS Group has also raised its year-end target for the S&P 500 Index from 6,200 points to 6,600 points, expecting corporate earnings resilience, easing trade tensions, and interest rate cuts to drive further growth [2]. Citigroup and HSBC have similarly raised their targets, with Citigroup projecting the index to reach 6,600 points and HSBC forecasting it to reach 6,400 points [2].

Despite the bullish sentiment, economists anticipate that the upcoming Personal Consumption Expenditures (PCE) report could signal persistent inflation. The report is expected to show a 2.9% increase, which could lead the Federal Reserve to adopt a more cautious tone, potentially reducing the likelihood of an interest rate cut in September [2].

The S&P 500 Index has shown remarkable resilience this year, rising by more than 8% so far. With 459 companies in the index reporting quarterly earnings, 80.2% have exceeded analysts' expectations, further bolstering confidence in the market's performance [2].

References:
[1] https://www.reuters.com/business/jefferies-lifts-sp-500-annual-target-6600-resilient-earnings-2025-08-25/
[2] https://news.futunn.com/en/post/61011582/ubs-group-has-raised-its-target-for-the-s-p?futusource=news_newspage_recommend