Wells Fargo is moving funds out of bonds and into stocks

Published 20/03/2025, 11:40
© Reuters.

Investing.com -- Wells Fargo said in a note Thursday that it is shifting its investment strategy, moving funds from bonds into stocks as market uncertainty creates new opportunities. 

The firm cited recent tariff policies and federal job cuts as factors weighing on investor sentiment but emphasized that these developments are unlikely to push the U.S. economy into a recession.

"Our outlook is why we adjusted our investment guidance last week and moved funds out of bonds and into stocks," Wells Fargo (NYSE:WFC) analysts wrote. 

The bank is particularly focused on mid-cap equities, which it sees as having strong potential amid current market conditions.

While recent media headlines have fueled concerns, Wells Fargo believes the economic impact of new tariffs and government layoffs will be manageable. 

They note that some companies will be able to mitigate tariff-related price increases by sourcing materials from alternative suppliers. 

"That means price increases to U.S. households and businesses are likely to be moderate and spread out into increments," the note stated.

On the labor front, the firm noted that federal job cuts have historically had limited economic impact. 

The bank highlights Oxford Economics data, which is said to show that following similar consolidations under Presidents Clinton and Obama, "50% of those laid-off workers got private-sector jobs and most of the rest ended up either in state or local governments or elsewhere in the federal government."

Wells Fargo also sees market sentiment as improving, pointing to last Friday’s strong rebound, where over 90% of S&P 500 stocks advanced. 

Given the likelihood of fixed-income volatility, the firm is shifting capital out of long-term debt into short-term debt to help preserve client assets.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.