UBS lifts its S&P 500 price target to 5,900, doesn't rule out a move to 6,500
The Swiss investment firm also set a mid-2025 target of 6,200 for the index, reflecting optimism about the market's prospects.
"The market P/E is high, but reasonable in the context of the favorable macro environment," UBS strategists said in a note. This broadening earnings growth is seen as a primary driver for the revised targets. The brokerage firm acknowledges the market's price-to-earnings ratio is high but considers it reasonable given the favorable macroeconomic conditions.
Moreover, the expectation of the Federal Reserve pivoting towards rate cuts is viewed as a positive influence on equity markets.The surge in AI investment is highlighted as a significant factor contributing to the positive outlook for U.S. equities."While not our base case, we also think investors should be open to the upside possibility that valuations move even higher. The Fed will likely be cutting rates into an investment/innovation boom which could further stoke animal spirits.
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