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LivestreamMenuInvestors are still underestimating just how far the earnings driven rally has to go, according to UBS. The bank hiked its S & P 500 year-end target to 8,100 from 7,500, meaning the broader index could climb more than 8% over the next six months. That would mean the S & P 500, which is already up more than 8% year to date, would notch a high double-digit return for the full year. It also expects the benchmark could climb to 8,900 in 2027. “We are bullish on US equities as Tech-led earnings growth supports much further upside two years into in an AI upcycle, with signs of broadening capex and demand outside of Tech,” strategist Keith Parker wrote. The stock market has floundered of late as it deals with an escalation in hostilities in the Middle East, as well as an uncertain macroeconomic outlook. But Parker expects that much of those challenges will soon be in the rearview mirror. He said the “max pressure” from the U.S.-Iran war, as well as policy uncertainty from the Trump administration, have already been digested. .SPX YTD mountain SPX year to date Parker thinks investors are underestimating the strength in earnings. He said the S & P 500 could post earnings growth of greater than 28% this year, above consensus, with much of that driven by semiconductor companies — which are mounting backlogs to keep up with demand. He thinks that strengthening profits will drag down the multiple for the overall stock market, noting that the multiple is already down 10% from the end of the last year — meaning stocks will continue to trade below fair value. The new target is now the second highest target on the Street, behind only Oppenheimer’s view that the broader index can end the year at 8,150, according to CNBC’s 2026 market strategist survey . On average, strategists expect the S & P 500 will end the year at 7,850. The broad market index was last around 7,440. “Markets appear to be pricing slower growth, lower margins and/or higher rates, while earnings revisions, profitability and long-term growth expectations continue to move higher,” Parker wrote. “Drawdown risks from geopolitics, rates and numerous AI issues remain, but we see attractive asymmetry for equities in the months and year ahead.”Read More
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