On June 17, Wells Fargo Securities released a new report indicating that the firm has raised its year-end target for the S&P 500 index from 7300 to 7950. The report suggests that the easing of U.S.-Iran tensions, a decline in inflation pressures, and fully priced rate hike expectations are creating a 'triple positive resonance' for U.S. stocks. The report highlights that with a temporary peace agreement between the U.S. and Iran expected to be signed and improved expectations for navigation through the Strait of Hormuz, the global energy risk premium has significantly decreased. The drop in oil prices is helping to alleviate inflation pressures in the U.S. and improving market expectations for the Federal Reserve's policy path. Wells Fargo Securities equity strategist Wu Chengquan stated that current market sentiment has shifted from extreme caution back to neutral, with AI and semiconductor sectors remaining core growth drivers. Cyclical stocks are expected to see a rebound as geopolitical risks recede, and funds may continue to rotate from defensive assets to risk assets. Meanwhile, the firm believes that the market has partially priced in the policy stance of the new Federal Reserve Chair, Kevin Warsh. In the short term, inflation remains the main variable, but the risks of rate hikes are relatively limited. However, the report also highlights two major downside risks: first, the historical volatility pressure associated with the U.S. midterm election cycle; and second, the potential tightening of regulations facing the AI industry, which could disrupt the current core narrative driving U.S. stock gains. Overall, Wells Fargo Securities believes that U.S. stocks are still in a phase of sentiment recovery and structural market continuation, but the risk of increased volatility is accumulating.