UBS continues to hold a “Attractive” outlook on U.S. equities, contending that the essential factors supporting the bull market are still in place, notwithstanding geopolitical tensions and recent fluctuations in the market. In a note led by David Lefkowitz. Equities, UBS projected that the S&P 500 will attain 7,300 by June and 7,700 by December 2026, underpinned by “healthy profit growth, supportive Fed policy, and the adoption of AI.” UBS posits that the market’s resilience observed thus far this year is indicative of a persistently supportive backdrop. “Profits are growing at a healthy clip, the Fed is likely to cut rates later this year, and the adoption of AI should create value for shareholders,” the firm stated.

UBS anticipates that earnings for the S&P 500 will reach $310 by 2026, indicating an 11 percent increase. UBS’s base case posits that the U.S.–Iran conflict will result in only a temporary disruption to energy supplies. It anticipates a decrease in oil prices from their current elevated levels, which would facilitate an upward movement in equities. The bank cautioned that if “energy does not start flowing from the Persian Gulf in the coming weeks, investors should be prepared for equity market downside,” but noted that historically the S&P 500 “typically rises after geopolitical events.”

UBS also emphasized market indicators that suggest additional advancements. It was observed that during the volatility surge in March, the VIX concluded above 29, “higher than 93 percent of all observations,” and historically, the S&P 500 has yielded an average return exceeding 20 percent in the subsequent year. UBS maintains its outlook for U.S. stocks to rise throughout the rest of the year, reaffirming its year-end target of 7,700.