In our view, higher inflation, firmer interest rates, and diminishing liquidity are positioning the U.S. for an

economic soft patch. As we reach the midpoint of 2024, investors are asking whether inflation will move

low enough for the Federal Reserve to cut interest rates, as well as when the economy and earnings will

pivot from slowing to more sustained growth.

Timing these turnarounds is always challenging, but we can help investors position portfolios for the

slowdown we anticipate and watch for early signs of an economic and earnings upturn.

Our 2024 Midyear Outlook serves as a guide to navigate the changing environment. In the near term, we

favor a focus on quality, especially in equity and fixed income markets, but we also look for a broader set of

opportunities as the economic pivot point approaches.

In equities, as the economy continues to slow, we favor high-quality U.S. large caps over mid-cap and

small-cap, and international equities.

We believe a corporate profit recovery is likely in 2025, and later this year, equity prices should begin to

anticipate the turning point to stronger and more sustained earnings growth. For this reason, we view

periods of equity market weakness as opportunities for selective buying.

In the bond market, we expect U.S. short-term taxable fixed income to continue to perform well, as the

Federal Reserve slowly and deliberately initiates interest-rate cuts later this year. Also, we think municipal

bond credit fundamentals remain favorable for investors in higher effective tax brackets. For now, we

remain neutral on intermediate and long-term fixed-income securities.

In Real Assets, we believe commodity prices, which have stalled since mid-2022, should start to rise again.

We are maintaining our favorable view of this asset class.

Investment and Insurance Products:  NOT FDIC Insured  NO Bank Guarantee  MAY Lose Value

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Finally, in the alternative investment space, given the continued uncertainty in the economy and markets,

we favor hedge-fund and private-capital strategies that are more defensive and generally do not move in

tandem with traditional stock and bond markets. As the economy recovers, we will look to transition to

more directional strategies, including Long/Short Equity and Activist Equity categories.

For more specific guidance across asset classes, sectors, and industries, as well as our top five portfolio

ideas, please read our special report: 2024 Midyear Outlook: Approaching the economy’s pivot point.

Risk Considerations

Forecasts and targets are based on certain assumptions and on views of market and economic conditions which are subject to change.

Different investments offer different levels of potential return and market risk. The level of risk associated with a particular investment or asset class

generally correlates with the level of return the investment or asset class might achieve. Stock markets are volatile. Stock values may fluctuate in

response to general economic and market conditions, the prospects of individual companies, and industry sectors. Foreign investing has additional risks

including those associated with currency fluctuation, political and economic instability, and different accounting standards. These risks are heightened in

emerging markets. Small- and mid-cap stocks are generally more volatile, subject to greater risks and are less liquid than large company stocks. Sector

investing can be more volatile than investments that are broadly diversified over numerous sectors of the economy and will increase a portfolio’s

vulnerability to any single economic, political, or regulatory development affecting the sector. Bonds are subject to interest rate, credit/default, liquidity,

inflation, and other risks. Prices tend to be inversely affected by changes in interest rates. Municipal bonds offer interest payments exempt from federal

taxes, and potentially state and local income taxes. Municipal bonds are subject to credit risk and potentially the Alternative Minimum Tax (AMT). Quality

varies widely depending on the specific issuer. Municipal securities are also subject to legislative and regulatory risk which is the risk that a change in the

tax code could affect the value of taxable or tax-exempt interest income. The commodities markets are considered speculative, carry substantial risks,

and have experienced periods of extreme volatility. Investing in a volatile and uncertain commodities market may cause a portfolio to rapidly increase or

decrease in value which may result in greater share price volatility. Real estate has special risks including the possible illiquidity of underlying properties,

credit risk, interest rate fluctuations and the impact of varied economic conditions. Other risks associated with investing in listed REITs include the use

of leverage, unexpected reductions in common dividends, increases in property taxes, and the impact to listed REITs from new property development.

Alternative investments, such as hedge funds and private capital/private debt strategies, are not appropriate for all investors. Any offer to purchase or

sell a specific alternative investment product will be made by the product's official offering documents. Investors could lose all or a substantial amount

investing in these products.

General disclosures

The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular investor

or potential investor. Do not use as the sole basis for investment decisions. Do not select an asset class or investment product based on performance

alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time

horizon.

Wells Fargo Investment Institute, Inc., is a registered investment adviser and wholly owned subsidiary of Wells Fargo Bank, N.A., a bank affiliate of Wells

Fargo & Company.

Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed

or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s)

with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any

investments, investment transactions or communications made with Wells Fargo Advisors.

Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC,

separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company.

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