UBS Group’s wealth-management arm is optimistic about the future of the stock market, as they have raised their 2024 price target for the S&P 500. This prediction suggests that stocks will reach record levels before the end of this year.
Mark Haefele, the chief investment officer at UBS Global Wealth Management, explained that the team now has higher confidence in their base case scenario of an economic soft landing. They also expect the Federal Reserve to cut interest rates four times throughout the year, with the first rate cut occurring in May.
With this positive outlook, UBS has revised its December S&P 500 target to 5,000, offering a potential 6.4% upside from the current closing price. This revision is based on various factors, including the latest jobs report, which revealed revisions to previous months’ data and a decline in average hours worked. These factors suggest lower wage growth and reduced inflationary pressures.
UBS predicts that consumption will remain strong, especially since unemployment is still below 4%. As a result, they advise their clients to invest their cash holdings quickly. They also recommend focusing on quality stocks from companies with strong balance sheets and a reputation for delivering consistent earnings growth.
Despite a nine-week winning streak coming to an end last week, the UBS team believes that the recent pullback in the S&P 500 is due to various factors and does not signal a sharp decline. They anticipate a gradual cooling of the market instead.
On Monday, US stocks had a mixed opening. While the S&P 500 and Nasdaq Composite were slightly up, the Dow Jones Industrial Average was down. This decline was primarily attributed to Boeing’s declining shares.
Overall, UBS Group’s wealth-management arm is optimistic about stock market performance, as they anticipate record levels by the end of the year. Their revised price target for the S&P 500 and projections of rate cuts by the Federal Reserve demonstrate their confidence in the market’s potential for growth.