Wells Fargo raised its year-end S&P 500 price target citing strong overseas growth and strong second-quarter earnings. The new forecast still calls for lower prices from here.

“Earlier this year, we had concerns that investors might fret over potential for a 2018 pickup in inflation and interest rates,” wrote Paul Christopher, Wells Fargo’s head global market strategist. “But our new (and more moderate) inflation expectations imply less S&P 500 index downside than we previously had anticipated.”

Christopher raised the target to a range of 2,300 to 2,400, up from its prior range of 2,230 to 2,330. The high end of the new forecast is about 1 percent below where the S&P 500 closed on Monday. Wells Fargo now sees S&P 500 EPS at $129, implying a 17.83 to 18.60 price-to-earnings ratio.

“We expect faster economic growth and low inflation in the second half to support continuing S&P 500 Index earnings growth,” added the strategist, referring to the strong earnings numbers in the second quarter. However, “small-cap valuations remain stretched versus historical levels … We recommend investors remain evenweight mid caps and underweight small caps.”

The strategist called bond-bubble fears overblown, adding that the 10-year Treasury yield could move modestly higher as the U.S. economy continues to expand and labor markets tighten.

“U.S. demographic trends are unlikely to change without a meaningful increase in new immigration — and debt levels are likely to deteriorate over the next decade,” wrote Christopher. “So unless productivity-growth trends reverse, the ‘Greenspan bond-bubble’ fears are misplaced.”

The revised range puts Wells Fargo just below the average forecast of Wall Street strategists. The median year-end target among top Wall Street firms is about 2,430, with Morgan Stanley’s 2,700 forecast the highest and Fundstrat’s 2,275 forecast the lowest.