Wells Fargo Unit Boosts Bonds, Cuts Small Caps as 2025 Outlook Shifts

Wells Fargo Investment Institute revised its macro and asset-allocation views on 5 August, citing a modestly firmer outlook for the U.S. economy and shifting market conditions. The research arm of Wells Fargo & Co. lifted its 2025 U.S. GDP growth projection to 1.3% from 1.0%, saying consumer resilience and steady labor-market gains should offset headwinds from elevated interest rates. Against that backdrop, the institute cut its stance on U.S. small-cap equities to Unfavorable from Neutral, arguing that higher financing costs and slowing profit momentum leave the segment vulnerable. Conversely, it raised U.S. intermediate-term taxable fixed income to its top ranking of Most Favorable, pointing to attractive yields and the potential for price support if the Federal Reserve starts easing policy in 2026. Within commodities, the team downgraded the energy sector to Neutral from Favorable, noting softer demand growth and expanding non-OPEC supply.