Wall Street Analysts Grow More Skeptical as S&P 500 Rallies, Seen as Contrarian Bullish Signal

Wall Street analysts are cutting their recommendations on S&P 500 companies at the fastest pace since the Iran war erupted, even as the index notches fresh records. The growing skepticism is interpreted as a healthy contrarian signal that the rally has room to run, with few signs of outright euphoria. The proportion of Russell 3000 constituents with a buy rating stands at 82%, slightly above the long-term average but well below the dot-com peak of 90%, Jefferies data show. A Bank of America contrarian gauge tracking strategists’ recommended stock allocations remains in neutral territory, implying a 12% price return for the S&P 500 over the next 12 months. Bears continue to outnumber bulls in the latest AAII survey, reinforcing the cautious backdrop. The S&P 500 has risen 20% over nine consecutive weeks since mid-April 2026, driven by artificial-intelligence optimism and hopes for a Strait of Hormuz peace deal. However, elevated valuations, narrow market leadership, and Iran’s June 1 suspension of talks threaten to disrupt gains. Jefferies’ Andrew Greenebaum called the advance “one of the most reluctant rallies in a long time.”