UBS Global Wealth Management has reiterated its forecast for the S&P 500 of 6600 by December 2025.
According to Jason Draho, Head of Asset Allocation Americas at UBS, the market's performance this year could lead to a festive holiday season for investors. However, he noted that the current market conditions are not indicative of overly enthusiastic financial markets.
This observation is based on several indicators including moderate consumer and business sentiment, tepid merger and acquisition (M&A) activity, and a lack of initial public offerings (IPOs).
The firm's outlook suggests that while the markets are not driven by excessive speculation or narratives of paradigm shifts, they are expected to keep rising steadily. This rise is anticipated to be supported by solid fundamentals rather than speculative fervor.
UBS's analysis indicates that if policy tail risks do not come to pass and the Federal Reserve reduces interest rates by another 125 basis points as they predict, the market sentiment could shift by the end of 2025.
However, Draho emphasizes the difficulty in predicting investor sentiment, which he suggests is even more challenging than forecasting economic conditions.
Investors are advised to brace for potential fluctuations and corrections similar to those experienced in 2024, which were attributed to concerns about economic fundamentals rather than a bursting of investor euphoria.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.