UBS Global Wealth Management raised its year-end forecast for the S&P 500 to 6,600, the second upgrade in two months, reflecting confidence in resilient corporate earnings, easing trade tensions, and potential U.S. interest-rate cuts. The new target implies a 3.6% upside from the index’s latest close of 6,370.17.
This revision follows a late-June adjustment, when UBS lifted its forecast from 6,000 to 6,200. The swift succession of upgrades underscores the bank’s conviction that the equity rally—fueled largely by artificial intelligence–driven gains—still has room to extend.
Other major brokerages, including Citigroup and HSBC, have also raised their targets this month, signaling a broader wave of optimism among Wall Street strategists.
Corporate Earnings Drive Optimism
The strongest tailwind for equities remains corporate earnings. As of August 15, 459 S&P 500 companies have reported second-quarter results, with 80.2% surpassing analyst expectations, according to LSEG data.
UBS strategists noted that “the bull market is intact and stocks are likely to rise over the next year.” Still, they cautioned that valuations appear stretched and near-term catalysts may be limited. Their position remains “neutral” on U.S. equities despite the index upgrade.
Supporting this outlook, UBS also raised its earnings-per-share (EPS) projection for 2024 to $270, up from $265. Looking further ahead, the firm lifted its mid-2026 target for the S&P 500 to 6,800 and nudged its EPS forecast to $290 from $285.
Key highlights driving sentiment:
- AI-Driven Gains: Technology remains a primary engine for growth.
- Strong Earnings: Over 80% of companies beat estimates this quarter.
- Upgraded EPS: Forecasts for 2024 and 2026 both increased.
Fed Policy in Focus
Markets are also bracing for signals from the Federal Reserve. Chair Jerome Powell is set to speak at the Jackson Hole Symposium, with investors keen to assess whether slowing inflation and weaker labor data could open the door to rate cuts.
Lower borrowing costs could extend the current rally, as looser financial conditions tend to favor equity valuations. But any hint of hawkishness could temper momentum, particularly with the S&P 500 already near record highs.
With trade risks easing and earnings momentum holding steady, UBS’s second upward revision in two months reflects cautious optimism. Yet strategists warn that much of the good news may already be priced in, leaving investors reliant on policy clarity and continued earnings strength to sustain further gains.
