- UBS predicts stocks could rise 13%-14% in 2025.
- The bank supports the “no landing” view for the US economy.
- Low inflation may allow the Fed to cut interest rates, benefiting stocks.
UBS believes the stock market can see significant gains next year, forecasting the S&P 500 to reach 6,600 by year-end, indicating a potential 13% increase. This projection is based on ongoing economic growth and a strong job market, even if inflation and interest rates are slightly higher than expected.
Currently, the job market is robust, with 254,000 jobs added in September, exceeding expectations, and the unemployment rate is low at 4.1%. Additionally, retail sales rose by 0.4% in September, and GDP grew by 3% year-over-year in the second quarter.
With inflation moving closer to the Fed’s 2% target, UBS sees room for further interest rate cuts, which can positively impact stocks. There’s a 72% probability of a 50 basis point rate cut by year-end. Despite potential election-related volatility, UBS believes the overall favorable economic conditions will sustain the stock market’s positive trajectory.
Some analysts share this “no landing” perspective due to the US economy’s resilience, although the New York Fed sees a 57% chance of a downturn by September 2025.
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