UBS Forecasts U.S. Stock Market Rebound in Second Half, Raises S&P 500 Outlook

Quick overview

Swiss financial services firm UBS is forecasting a recovery in U.S. equities during the second half of the year and has raised its year-end target for the S&P 500, dismissing the likelihood of an escalation in trade tensions between the U.S. and China, as well as renewed conflict in the Middle East following ceasefires on both fronts.

In a note to clients, where it maintained a “neutral” stance on U.S. equities, UBS strategists said the upcoming Q2 earnings season is likely to prove resilient to these risks. They also cited the tax and spending package currently progressing through Congress as a potential boost to corporate cash flows.

UBS raised its 2025 earnings-per-share estimate for the S&P 500 to $265, reflecting 6% growth. For 2026, the forecast was increased to $285, implying a 7.5% annual gain, according to Investing.com.

In line with this, UBS lifted its S&P 500 target to 6,200 points by the end of 2025 and 6,500 by June 2026. On Thursday, the benchmark index closed at 6,141.02, hovering near new all-time highs despite sharp volatility earlier this year.

“U.S. equities continue to rebound from the tariff-driven selloff in March and April,” UBS analysts noted, adding, “We believe the recovery is justified, as most large-cap companies should be able to weather the tariffs reasonably well.”

Trump Tariffs Still a Wild Card

Nonetheless, UBS warned that stocks may still experience upside or downside volatility in the coming months, as markets respond to developments tied to President Donald Trump’s aggressive reciprocal tariff policies. The latest postponement on additional tariffs is set to expire in early July.

Analysts also noted that products affected by other existing tariffs will soon reach store shelves, potentially leading to “a slowdown in economic growth and a spike in inflation over the summer.”

“While investors have largely priced in this scenario, any data showing a sharper-than-expected deterioration could present headwinds for U.S. equities,” they cautioned.

The recent trade agreement between the U.S. and China appears to have brought renewed relief to global markets.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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