UBS Says the S&P 500 Bull Market Still Has Room to Run
UBS analysts believe the current bull market in U.S. stocks still has further to go, supported by steady economic growth, Federal Reserve rate cuts, and rising investment in artificial intelligence (AI).
In a note to investors this week, the bank said it expects another strong earnings season, with S&P 500 earnings per share (EPS) likely to grow around 10% in the third quarter, driven by healthy profit surprises.
1. Consumer Spending Remains Resilient
UBS highlighted resilient consumer spending as a key factor supporting the market.
“The labor market has cooled but remains healthy,” the analysts said. “Layoffs are limited, wages are still rising, and job openings remain at solid levels.”
The bank added that the outlook for consumer spending remains strong, helping to sustain both U.S. economic growth and corporate profitability.
2. AI Investment Continues to Drive Growth
The second reason for optimism, according to UBS, is the ongoing strength in AI-related investment.
UBS noted that AI adoption is expanding and capital spending remains supportive. It added that revenue growth among cloud providers should stay robust, and that companies linked to AI infrastructure will likely see their earnings estimates revised higher in the coming quarters.
This trend, the bank said, continues to underpin equity valuations and overall market optimism.
3. Fed Policy and Earnings Support the Market
UBS also pointed to monetary policy and valuation dynamics as additional drivers of the bull market.
“The third quarter earnings season should reinforce our view that the bull market remains intact,” the note said. “This is supported by durable earnings growth and upcoming Fed rate cuts, which create a favorable macro backdrop.”
UBS concluded that the boom in AI-related spending remains well-supported, strengthening its confidence that the bull market in U.S. equities will continue.
