ubs maintains positive outlook for s&p 500 targeting 6200 by june 2025

UBS strategists have maintained their bullish outlook for the S&P 500, with a price target of 6,200 by June 2025. The index has recently achieved its 45th all-time high of the year, reflecting strong investor sentiment and market performance.

Volatility Expected in the Near Term

However, volatility is expected in the near term as investors digest company financials and future guidance, given the approaching U.S. election and ongoing geopolitical tensions in the Middle East.

The anticipated earnings growth for the S&P 500 in the September quarter is projected to be between 5% and 7%, slower than the second quarter's 11% growth. This is primarily due to declining oil and gasoline prices. Despite this, UBS maintains its full-year earnings growth forecast for 2024 at 11%, indicating confidence in corporate profits.

Favorable Macroeconomic Environment

The macroeconomic environment remains favorable, with solid U.S. economic activity and a resilient labor market. The Federal Reserve's rate-cutting cycle is expected to further boost the U.S. economy through lower interest rates. UBS believes that profit growth in the S&P 500 will extend beyond the largest growth companies, with a focus on AI beneficiaries. Management guidance and the recent easing in bank lending standards are positive indicators for profit growth.

Upcoming Earnings Reports

While current valuations are high, UBS argues that they are reasonable given the economic backdrop. The upcoming earnings reports will provide critical insights into the health of individual companies and the broader market. The interplay between economic indicators, corporate profitability, and investor sentiment will be crucial in determining the trajectory of the S&P 500.

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