Wells Fargo Issues S&P 500 Buy Signal as Sentiment Indicator Signals Extreme Bearishness

Wells Fargo has issued a tactical contrarian buy signal for the S&P 500 after its proprietary sentiment indicator plunged to -1.0 from -0.5, pointing to extreme bearishness. The move reverses a sell signal initiated in August and marks the index's first buy signal since June 2025. Historically, the S&P 500 has advanced 89% of the time following this indicator's buy signal, posting an average gain of 6.5% over the subsequent three months. Strategist Ohsung Kwon noted excessive market pessimism surrounding AI financing, midterm elections, and Iranian geopolitical risks, despite headwinds from decelerating profit growth.