Fuguo Securities Raises S&P 500 Target to 7950 Points: US-Iran Ceasefire and Rate Cut Expectations Boost US Stock Sentiment

June 17 — In a fresh research note, Guotai Junan Securities has lifted its year-end target for the S&P 500 index from 7,300 points to 7,950 points. The Chinese brokerage points to a "triple bullish resonance" driving the U.S. stock market: easing U.S.-Iran tensions, falling inflationary pressures, and rate-hike expectations that are already fully priced in. The report notes that a likely temporary peace agreement between the U.S. and Iran, paired with improved navigation outlooks for the Strait of Hormuz, is causing a sharp drop in global energy risk premiums. Lower oil prices, in turn, are easing U.S. inflation pressures and refining market expectations for the Federal Reserve’s policy path. Wu Chengquan, Guotai Junan’s stock strategist, stated that current market sentiment has shifted from extreme caution to neutral. AI and semiconductor sectors remain core growth drivers, he added, while cyclical stocks are poised to rebound as geopolitical risks fade — with funds expected to keep rotating out of defensive assets into risk assets. The firm also believes the market has already priced in the policy stance of new Fed Chair Kevin Warsh. While inflation remains a key short-term variable, the risk of additional rate hikes is relatively limited. Still, the report highlights two major downside risks: volatility pressure tied to the U.S. midterm election cycle, and regulatory tightening looming for the AI sector — policy shifts that could disrupt the current themes powering the U.S. stock rally. Overall, Guotai Junan views the U.S. stock market as being in a phase of emotional recovery and structural rally extension, though the risk of rising volatility is building.