Wolfe Research bullish on equities, sees AI and semiconductors driving H2 gains

Wolfe Research has reaffirmed its bullish stance on U.S. equities for the second half of 2026, pointing to easing oil prices, resilient corporate earnings, and sustained investment in artificial intelligence as key catalysts. The firm expects the technology sector—especially semiconductors—to lead gains, with lower energy costs providing a tailwind for consumer spending and corporate margins. This optimism comes as Brent crude has slipped below $70 per barrel, narrowing the Brent-WTI spread to around $3, while U.S. Strategic Petroleum Reserve levels remain near 370 million barrels, offering a buffer against supply shocks. The easing of oil prices reflects ample OPEC+ spare capacity, estimated at over 5 million barrels per day, which has helped offset geopolitical premiums and kept the market in a slight contango structure, discouraging inventory builds.

For energy commodities traders, the Wolfe Research outlook carries implications for crude demand and refining margins. Easing oil prices, if sustained, could reduce input costs for refiners and support crack spreads—the difference between crude oil and refined product prices—which have recently widened as gasoline demand holds steady. Lower crude costs also dampen the inflation premium that has supported futures, potentially reducing hedging activity by airlines and logistics firms. Meanwhile, China's marginal demand remains tepid, with imports dipping as the economy shifts toward services, while Saudi-Russia coordination through OPEC+ continues to manage output to prevent a glut. Traders can track real-time price moves on NowPrice's live fuel dashboard to monitor how these macro views align with market action, including shifts in backwardation or contango across the curve.

Looking ahead, Wolfe Research warns that renewed U.S.-Iran tensions or stalled diplomacy remain key downside risks that could reverse the oil price decline, potentially squeezing spare capacity and flipping the market into backwardation. Markets will also watch for shifts in Fed policy and retail fund flows, which could either extend or cap the equity rally. The firm believes pullbacks are likely to be short-lived as long as AI investment momentum holds, but energy traders should monitor crude inventory data and OPEC+ compliance for signs of supply tightening that could alter the current favorable cost environment.