Amid recent stock market volatility, UBS has reiterated a bullish outlook on U.S. equities, maintaining its “Attractive” stance as it projects further gains for the S&P 500 through 2026.
The bank expects the benchmark index to climb to 7,300 by mid-2026 before advancing to 7,700 by the end of the year, supported by a combination of steady earnings growth, anticipated monetary easing, and continued momentum from artificial intelligence adoption.
UBS argued that the resilience seen in equities so far reflects a supportive macroeconomic backdrop. The bank noted that corporate profits are projected to remain strong, forecasting S&P 500 earnings of $310 in 2026, representing growth of about 11%.
At the same time, expectations that the Federal Reserve will begin cutting interest rates later in the year are seen as an additional tailwind for stocks, helping sustain investor appetite for risk assets.
The firm also pointed to structural drivers such as AI adoption, which it believes will continue to unlock value for companies and support equity valuations over the medium term.
Geopolitical impact
On the geopolitical front, UBS views risks stemming from the Iran conflict as manageable under its base-case scenario. The bank assumes that any disruption to global energy supplies stemming from tensions involving the Persian Gulf will be short-lived.
As a result, oil prices are expected to ease from elevated levels, reducing pressure on markets and allowing equities to move higher.
However, UBS cautioned that a prolonged disruption to energy flows could weigh on investor sentiment and lead to downside in equity markets. Even so, historical patterns suggest that stocks tend to recover following geopolitical shocks, reinforcing the bank’s constructive outlook.
At the same time, the bank noted that market-based indicators also support the bullish view. In this regard, UBS highlighted that volatility surged in March, with the VIX index reaching unusually high levels compared to historical observations.
Such spikes have historically been followed by strong equity returns over the subsequent year, often exceeding 20% on average.
Wall Street cautious on S&P 500
Meanwhile, Wall Street analysts hold a cautiously optimistic view for the S&P 500 through the end of 2026, anticipating further advances.
For instance, Goldman Sachs has reiterated its base-case target of 7,600 by year-end, supported by projected earnings per share reaching about $309 in 2026 and climbing to $342 in 2027, pointing to roughly 14% potential gains driven by sustained earnings momentum and economic expansion.
On the other hand, Morgan Stanley maintains a target near 7,800 in its base scenario, implying around 13% upside, while J.P. Morgan eyes 7,500, aligning with approximately 10% gains.
Although most outlooks remain bullish, citing accelerating earnings and supportive Federal Reserve policy, some analysts highlight risks of near-term corrections or more modest long-term returns due to AI-related spending uncertainties and geopolitical factors.
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