Wells Fargo (WFC.N) has a message for its clients: the worst is over, and you are free to trade.

The firm sees almost 10 per cent upside to the S&P 500 through 2018, with most of the gains coming in the next three to six months. It’s boosting its year-end target for the gauge to 2,950 from 2,863.

“The pullback in the equity market provides almost a free look at earnings,” analysts Christopher Harvey and Anna Han wrote in a note Wednesday. This year “will be a tale of two halves,” with the first featuring strong corporate earnings growth and a healthy merger-and-acquisition cycle, and the second “heavily influenced by the Fed tightening cycle.”

The increase in the target was partially due to Wells Fargo’s increase in annual earnings-per-share projections to US$150.76 from US$146.01, the analysts said, and also to a reduction in the risk premium to 150 basis points from 165 basis points as the Cboe Volatility Index spiked and interest rates rose. The new 2,950 target compares with an average 2,923 prediction from strategists whose estimates are compiled by Bloomberg as of Jan. 19.

“Recently, we’ve been telling clients to slowly and methodically invest their cash as the selloff unfolded. Now, we’re telling clients that they’re free to trade (invest the balance of your cash),” the report said. “Get in motion.”