UBS' outlook for US equity markets.
“Although some sentiment and positioning indicators suggest a modest pullback in the coming months, we continue to believe that the four key equity market drivers remain largely in place:
- solid growth
- disinflation
- Fed pivot
- explosion in AI investment
UBS are wary of the higher readings that have come in on inflation, which could be suggestive of an FOMC that is set to hold rates higher for longer, but think that trends in the jobs market will lead the Committee to a first rate cut in the middle of 2024.
Also see support from better-than-expected quarterly earnings, largely in-line first-quarter guidance, and broadening earnings growth expectations from more companies than just the “Magnificent Seven.”
