House Call: Talking Equity Markets with UBS Asset Management
At a Glance
Lead — The desk posits that the recent resilience in U.S. equities signals a continued bullish sentiment in the market, attributed chiefly to robust earnings growth despite ongoing macroeconomic uncertainties. Per the full note source, this sustained upward momentum has been largely driven by strong fundamentals, with a striking 20% year-on-year increase in S&P 500 earnings in Q1, marking six consecutive quarters of double-digit growth. Importantly, this positive outlook from UBS Asset Management may serve to bolster investor confidence amidst inflation concerns, particularly with no high-impact events on the horizon that could disrupt momentum.
Key Takeaways
- 01U.S. equities show resilience fueled by robust earnings growth.
- 02Q1 earnings rose by 20%, marking six consecutive quarters of growth.
- 03Investors remain confident despite geopolitical and macroeconomic challenges.
- 04No significant upcoming events could disrupt the current equity momentum.
Full Analysis
What the desk is arguing
The desk frames the strongest driver of the ongoing equity rally as the impressive earnings performance from U.S. firms, which has provided a cushion against geopolitical tensions and rising bond yields. Jeremy Zirin highlighted that earnings growth reached an extraordinary 20% year-on-year in the first quarter, underscoring a resilient economic backdrop amid growing concerns over AI market performance and fluctuating oil supply.
This strong earnings backdrop suggests that investor confidence could remain firm, with UBS's strong growth narrative helping to sustain momentum in U.S. equities as they approach record highs. The ability of companies to report six consecutive quarters of double-digit earnings growth indicates a robust fundamental environment despite elevated market uncertainties.
Where it sits in our coverage
Our consensus target for the S&P 500 currently sits at 1.075, with a range between 1.04 and 1.12. Specific industry targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This bullish outlook from the desk is somewhat aligned with the upper end of the consensus range, particularly supporting the optimistic targets set by firms such as jpmorgan.
How other firms see it
Firms aligned with this bullish sentiment include jpmorgan, pointing to strong earnings potentially leading to a more favorable market environment. In contrast, bofa maintains a more cautious stance, citing concerns over inflation and potential volatility.
The trajectory of U.S. equities could closely mirror the movements of the USD/JPY, especially if equity strength leads to a firmer dollar in the coming weeks. Investors should watch for any signals from the Federal Reserve regarding interest rates that could impact equity and FX markets alike.
Market Implications
Traders should monitor the S&P 500's movement towards its record highs, paying particular attention to any fluctuations in forward earnings guidance that may signal trends. Continued strong earnings could lead to renewed upward momentum in equity markets, influencing dollar strength against other currencies.
From the original
Join Jeremy Zirin, Senior Portfolio Manager of the House View Equity Portfolios and Head of the Private Client US Equity Team with UBS Asset Management, as he shares a performance update for US equities. Host: Dominic Schagar, Senior Equity Investment Specialist. Recorded on 18.0
Related speeches
4 itemsTop of the Morning: CIO Strategy Snapshot - Mid-year checkup
Lead — As UBS highlights in their recent market commentary, key factors such as tax policy, Fed actions, and economic growth are vital as we enter the second half of 2025. With the S&P 500 and NASDAQ 100 reaching all-time highs, market sentiment remains bullish, suggesting a potential for continued upward momentum in equities. The desk notes that these developments could influence currency movements, particularly against the backdrop of the Fed's policy adjustments. Per the full note [source], the S&P 500 has shown a total return of 5.6% for the first half of the year, pointing to a strong equity performance that may carry into the second half.
House Call: Talking Equity Markets with UBS Asset Management
The desk is positioning for a favorable outlook on US equities, buoyed by macroeconomic trends and an anticipated earnings growth. Per the full note [source], drivers of market performance have included tariff policies, fiscal stimulus, and prospective Fed rate cuts, which have collectively contributed to a year-to-date S&P increase of approximately 14%. With earnings growth expected to accelerate into the low teens by 2026, sentiment appears supportive of equity market momentum despite ongoing concerns about geopolitical tariffs and inflationary pressures. This positive outlook aligns with market consensus amid a lack of major events that could disrupt this trajectory in the immediate term.