UBS Strategist's Bullish S&P 500 Forecast Raises Caution Amid Rising Market Optimism

UBS strategist Jonathan Golub has upped his S&P 500 target to 5600 by December, a 17% rise from current levels, marking a more bullish stance than the 5400 predicted in February. This optimistic view comes amidst a recent Investors Intelligence survey showing an increase in bullish sentiment from 56.5% to 59.4%.

As the S&P 500 continues its upward trajectory, with the index up 11.2% year-to-date and near record levels, UBS joins other major brokerages in raising its year-end target. UBS Global Research strategist Jonathan Golub has upgraded the bank's S&P 500 target to 5,600 points, marking a more optimistic stance than the initial forecast of 5,400 in February [1].

The revision in UBS's forecast reflects growing optimism regarding the U.S. economy and corporate earnings. The S&P 500's performance in 2024 is expected to be driven by stronger earnings forecasts and a supportive economic backdrop, with fading risks of recession [1]. In fact, UBS strategists have increased their earnings-per-share (EPS) forecast for 2024 to $245 from $240, implying an 11.4% growth through the year [1].

UBS's bullish stance on the S&P 500 is not an isolated occurrence. Other major brokerages, including Deutsche Bank and Wells Fargo, have also predicted the index would end at 5,500 or higher in 2024 [1]. Deutsche Bank's revised year-end target is based on the expectation that strong corporate earnings will support equity valuations, while BMO Capital Markets' prediction of a 5,600-finish in 2024 is underpinned by a belief that the U.S. economy will maintain its momentum in the coming months [1].

The optimistic outlook for the S&P 500 is also reflected in recent investor sentiment. According to a survey conducted by Investors Intelligence, bullish sentiment has increased from 56.5% to 59.4% [2]. This marks the highest level of bullish sentiment since December 2021 and suggests that investors are increasingly optimistic about the prospects for U.S. equities in the coming months.

References:

1. Reuters. UBS lifts S&P 500s year-end target to street high 5,600. May 28, 2023. https://www.reuters.com/business/finance/ubs-lifts-sp-500s-year-end-target-street-high-5600-2024-05-28/
2. Investors Intelligence. Bulls Versus Bears Survey. May 26, 2023. https://www.investorsintel.com/bulls-versus-bears-survey/