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Investing.com -- UBS expects the S&P 500 to climb to 7,500 next year, driven by “around 14% earnings growth,” nearly half of which will come from technology stocks.
The forecast reflects what UBS calls a “tale of two halves” for the global economy, with short-term headwinds giving way to stronger growth later in 2026.
In a research note on Monday, UBS analysts said the global economy “is poised to accelerate in 2026” as confidence improves and fiscal stimulus gains traction.
But over the next few months, the bank believes the U.S. and other advanced economies must “navigate a soft patch, with tariffs still feeding through to prices and exports.”
UBS predicts the U.S. will lead global equity performance, forecasting roughly 10% returns for the market next year. UBS added that the S&P 500’s gains will come mainly from earnings rather than valuation expansion.
“The contribution from valuation is likely to be a small negative,” the analysts said, though they noted that “risks to multiples and the market are skewed to the upside” due to persistent inflows.
UBS expects the rally to broaden beyond large-cap technology names by the second quarter of 2026.
“We should see a broadening of the rally into lower-quality cyclicals,” the firm wrote, following a period of consolidation early in the year.
While Europe and emerging markets should also deliver “decent earnings” and returns of about 8%, UBS believes they will “mildly underperform” U.S. equities.
The bank concluded that “better risk-reward exists in equities than in credit,” reinforcing its preference for stocks over bonds heading into next year.