There’s nothing like higher prices to change the minds of investors — and Wall Street analysts.

Witness the recent upward flurry of S&P 500
SPX,
-0.46%

price targets. Wells Fargo went from being one of the biggest bears on Wall Street to being a bull. Bank of America this week grudgingly capitulated, lifting its year-end target to 4,250 from 3,800, even as head of U.S. equity strategy Savita Subramanian warned, “This may not end now. But when it ends, it could end badly.”

So what might be more notable is when a Wall Street firm sticks to its guns. Mizuho Securities USA, a primary dealer of Treasury securities, still says the S&P 500 will end the year at 4,400. Key to the Mizuho take is the firm’s view the Federal Reserve is moving to a pre-emptive rather than reactive approach, as the Fed becomes increasingly concerned that supply-chain disruptions will lead to a more sustained rise in prices.

This in turn will lead the dollar — as measured by the DXY
DXY,
-0.02%

index — to rise to 95, which will then increase foreign interest in long-duration dollar assets to get yield, says Steve Ricchiuto, its chief U.S. economist. He says the curve will bear flatten between now and year-end, with the 10-year
TMUBMUSD10Y,
1.329%

rising to 1.5%, while the 2-year
TMUBMUSD02Y,
0.220%

climbs as high as 0.5%.

“A flatter curve, a stronger dollar, and the risk of an earlier liftoff all argue for a long overdue equity market correction, which is why we have decided not to chase the broad market index even though our initial 4400 year-end target has already been exceeded,” he says.

This backdrop suggests a move away from small- and midcap stocks, back into larger-cap companies. “We also have a preference for growth over cyclicals, and suggest a reduction in exposure to financials,” he adds. Growth might disappoint expectations in 2022, and tax hikes could weigh on hiring well before any increase in transfer payment can lift demand.

Biden talks with Xi

President Joe Biden, after markets closed, delivered a speech on fighting the COVID-19 pandemic, in which he ordered all executive branch federal employees, and contractors, to be vaccinated, and will require employers with 100 or more workers to either require vaccination or weekly testing.

The White House also said Biden spoke with Chinese President Xi Jinping for the first time in seven months. “The two leaders had a broad, strategic discussion in which they discussed areas where our interests converge, and areas where our interests, values, and perspectives diverge,” the readout of the call said.

Affirm
AFRM,
+5.16%

shares jumped more than 20% in after-hours action, after the installment payments provider raised revenue guidance.

Harvard University said it will stop investing in fossil-fuel companies.

Fed regional presidents Robert Kaplan and Eric Rosengren said they would sell off the individual stocks they own, after controversy when their active stock-market trading was disclosing.

The markets

Helped by gains in Asia — with a six-month high for the Nikkei 225
NIK,
+1.25%

— U.S. stock futures
ES00,
+0.40%

NQ00,
+0.35%

were stronger. The yield on the 10-year Treasury was 1.33%.

Random reads

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